However, Haitham Al Ghais, Secretary-General of the Organization of Petroleum Exporting Countries (OPEC), has clarified the situation, explaining that the real cause of high fuel prices is the taxes imposed by governments, including those of major oil-consuming nations.
In an article published on Tuesday, Al Ghais said that crude oil and its derivatives are essential to global industries, powering sectors from transportation to pharmaceuticals.
Contrary to the belief that rising oil prices benefit oil producers the most, the OPEC chief dispelled this idea, stressing that oil-producing nations are not the primary beneficiaries of retail fuel sales.
“Revenues are generated, but they predominantly go to major oil-consuming countries through taxation,” Al Ghais said. He noted that OECD (Organisation for Economic Co-operation and Development) countries earn far more from retail fuel sales than OPEC nations do from crude oil sales.
Between 2019 and 2023, OECD nations earned roughly $1.915 trillion more annually from petroleum products than OPEC countries.
In 2023 alone, taxes accounted for around 44 per cent of the retail price of petroleum products in OECD nations, and in some European countries, this figure exceeded 50 per cent.
For Nigerian consumers, this underscores that the high cost of fuel is not solely due to crude oil prices or refinery margins. A significant portion of what they pay goes towards government taxes.
“The price paid at the pump is influenced by various factors, including crude oil prices, refining, transportation, and taxes,” Al Ghais added.
In the UK, for instance, fuel duties are expected to generate £24.7 billion in revenue for the government during 2023-24, representing 2.2 per cent of total receipts. This reflects a global trend where governments, both in oil-producing and oil-consuming nations, heavily rely on taxes for petroleum products.
Al Ghais also emphasised that although oil-producing countries earn from oil sales, a substantial portion of these revenues is reinvested in exploration, production, and infrastructure to maintain a steady supply for global consumers. Such reinvestment is crucial for ensuring future oil availability and stability in energy markets.
“While taxes are essential for funding public services and infrastructure, they also make up a significant part of the price consumers pay for fuel.”
The OPEC Secretary-General called for a change in the narrative that pits consumers against producers, stressing that both are crucial stakeholders in the broader energy system.
Nigeria’s current fuel price crisis serves as a stark reminder of the complexities of fuel pricing, where taxes, rather than oil producers, play a major role in the high costs Nigerians face at the pump.
