The study investigates how Nigeria’s economic fluctuations shape energy consumption patterns, focusing on the interplay between business cycles, foreign direct investment (FDI), and energy intensity. Key questions include: how business cycles influence energy use, whether FDI exhibits cyclical behavior with the economy, and the extent to which FDI mediates the business cycle–energy intensity relationship. Using annual data from the World Development Indicators (1971–2022) on GDP per capita, urbanization, ecological footprint, and energy intensity, the analysis applies unit root tests, ARDL bounds testing, and post-estimation diagnostics. Results reveal that the business cycle has a negative effect on energy consumption, while FDI tends to amplify business cycles. However, FDI’s moderating effect on the business cycle–energy intensity link is insignificant. Urbanization and trade openness significantly influence energy intensity. The findings suggest a counter-cyclical link between business cycles and energy use, a pro-cyclical connection between FDI and economic cycles, and limited combined effects of FDI and business cycles on energy intensity. Policy recommendations include strengthening early detection and monitoring of business cycles to tailor energy policies to different economic phases and ensuring that FDI inflows do not exacerbate environmental degradation. Nigeria is urged to avoid sacrificing environmental quality for economic gains when leveraging foreign investment.