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Transportation and distribution of petroleum products in Nigeria have been associated with a lot of environmental hazards which have resulted to social and economic losses. This paper therefore attempts to examine the distribution system and assess the perceived environmental impacts associated with fuel transportation and distribution in Nigeria by different modes of transportation. Using a questionnaire survey, the results of an analysis of people’s perceptions of identifiable environmental impacts show traffic accident and fire outbreak rated highest, and contributing 28.58% and 28.29% of the perceived impacts. Of the impacts of different modes of transportation, pipeline transport was perceived as having worst records of environmental impact contributing 31.03%, followed by road haulage contributing 29.36%. In addition, the comparative analysis of the impact among different modes using Chi- square method also indicate that there is high level of agreement among the respondents on their perceptions of environmental impacts generated by different modes of transportation. The paper finally suggested that modes with least perceived environmental impacts should be used mainly for fuel transportation and distribution. The need for complete deregulation of the downstream sector of the oil industry is also advocated as a solution to the problems of transporting and distributing petroleum products in Nigeria.