Nigeria’s recent fuel price hike has raised significant concerns, with many blaming local operators like Dangote Refinery.
However, OPEC Secretary General Haitham Al Ghais clarified that the main factors driving high fuel prices are government-imposed taxes, particularly from major oil-consuming nations.
In an article published on Tuesday, Al Ghais emphasized that crude oil and its derivatives are crucial for global industries, including transportation and pharmaceuticals.
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He also addressed the misconception that rising oil prices primarily benefit oil producers, noting that these nations do not gain the most from retail fuel sales.
“Revenues are often generated, but they are predominantly earned by major oil-consuming countries through taxation,” Al Ghais highlighted. The Secretary General emphasized that countries within the OECD (Organisation for Economic Co-operation and Development) earn substantially more from the retail sale of petroleum products than OPEC member countries make from the sale of crude oil itself.
From 2019 to 2023, OECD nations generated about $1.915 trillion more per year than OPEC nations from petroleum products. In 2023, taxes represented approximately 44% of the final retail price of these products in OECD countries, with some European nations seeing this figure surpass 50%.
For Nigerian consumers, this highlights that the high cost of fuel at the pump is not merely a reflection of crude oil prices or refinery margins. Instead, a significant portion of what consumers pay is directed towards government taxes. “It is important to recognize that the price paid by consumers at the pump is determined by multiple factors, including crude oil prices, refining, transportation, and, notably, taxes,” Al Ghais pointed out.
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In the UK, fuel duties are projected to generate £24.7 billion for the government in 2023-24, accounting for 2.2% of total receipts. This reflects a broader trend where governments in both producing and consuming nations rely on petroleum products for revenue.
Haitham Al Ghais emphasized that while oil-producing nations do profit from oil sales, a significant portion of that revenue is reinvested into exploration, production, and infrastructure to ensure a steady supply for global consumers.
This reinvestment is vital for sustaining future oil supplies and stabilizing energy markets.
In summary, while taxes significantly contribute to government services and infrastructure, they also constitute a large part of what consumers pay at the pump.
Al Ghais urged a shift in perspective, advocating for collaboration between consumers and producers as essential stakeholders in the energy ecosystem.
The ongoing fuel price crisis in Nigeria highlights the complexities of fuel pricing, where taxes, rather than oil producers, largely determine what Nigerians pay at the pump.
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