ENUGU, Nigeria (VOICE OF NAIJA)- The recent surge in fuel prices across Nigeria has led to public frustration, with many pointing fingers at oil producers, particularly the Dangote Refinery.
Reacting to this, the Organization of the Petroleum Exporting Countries (OPEC), Secretary General Haitham Al Ghais has debunked this assumption, clarifying that the true cause of the high fuel prices is rooted in government-imposed taxes, not local oil producers.
In a statement made available on Tuesday, Al Ghais explained that crude oil and its derivatives are essential to global industries, powering sectors ranging from transportation to pharmaceuticals.
While it is commonly believed that rising oil prices directly benefit producers, Al Ghais stressed that the retail fuel prices paid by consumers are not dictated solely by oil producers.
“Revenues from fuel sales are predominantly collected by major oil-consuming countries through taxation,” he said.
Al Ghais highlighted that nations within the Organisation for Economic Co-operation and Development (OECD) profit significantly more from the retail sale of petroleum products than OPEC member countries earn from selling crude oil.
From 2019 to 2023, OECD countries made approximately $1.915 trillion more annually from petroleum products than OPEC nations generated from crude oil sales.
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In 2023, taxes accounted for about 44 per cent of the final retail price of petroleum products in OECD countries, with some European nations seeing this percentage exceed 50 per cent.
For Nigerian consumers, he said that this means that the high prices at the pump are not purely a result of crude oil prices or refinery costs. Instead, a significant part of the price is driven by taxes imposed by governments.
Al Ghais emphasized, “The price paid by consumers at the pump is determined by multiple factors, including crude oil prices, refining, transportation, and, notably, taxes.”
As an example, fuel duties in the UK are expected to generate £24.7 billion in revenue for the government in 2023-24, which represents 2.2 per cent of all government receipts.
Channels Television reports that this demonstrates the global trend where governments in both oil-producing and oil-consuming countries leverage petroleum products for revenue generation.
Al Ghais further pointed out that while oil-producing nations do earn revenue from crude oil sales, a significant portion of that income is reinvested in exploration, production, and infrastructure projects.
These investments are critical to maintaining future oil supplies and ensuring the stability of global energy markets. In conclusion, the OPEC Secretary General called for a shift in the narrative that pits consumers against oil producers, reminding the public that both groups are integral stakeholders in the energy ecosystem.
He further highlighted that taxes play a crucial role in funding government services and infrastructure, but they also constitute a considerable portion of the price consumers pay for fuel.
Al Ghais maintains that the current fuel price crisis in Nigeria serves as a reminder of the complex factors influencing fuel prices, where government taxes, rather than oil producers, play a significant role in determining what Nigerians pay at the pump.