Nigeria’s recent fuel price hike has sparked outrage, with many pointing fingers at local oil producers, including Dangote Refinery. However, OPEC Secretary General Haitham Al Ghais has clarified that the real cause of soaring fuel prices lies in government taxes, not oil producers.
In an article published on Tuesday, Al Ghais emphasized that while crude oil is vital to various industries, the high retail fuel prices are largely due to taxes imposed by major oil-consuming countries. He highlighted that governments, particularly in OECD (Organisation for Economic Co-operation and Development) nations, earn far more from the retail sale of petroleum products than OPEC countries do from crude oil sales.
Between 2019 and 2023, OECD nations earned approximately $1.915 trillion more annually than OPEC nations from petroleum products. In 2023 alone, taxes made up around 44% of the retail price of petroleum products in OECD countries, surpassing 50% in some European nations.
For Nigerian consumers, this means that the high fuel prices are not solely driven by crude oil costs or refinery profits. Instead, a significant part of the price at the pump is attributed to taxes imposed by governments. Al Ghais noted that factors such as refining, transportation, and especially taxes contribute to the final retail price consumers pay.
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In countries like the UK, fuel duties are expected to generate £24.7 billion in revenue for the government in 2023-24, underscoring the global trend of governments relying on petroleum products for revenue.
While oil-producing nations do earn revenue from oil sales, much of it is reinvested into exploration and production to ensure a stable energy supply. Al Ghais urged a shift away from the narrative that blames oil producers, highlighting that both consumers and producers are vital stakeholders in the global energy market.
The ongoing fuel price crisis in Nigeria underscores the complexity of fuel pricing, with taxes playing a significant role in what consumers ultimately pay at the pump.
