The Secretary General of the Organization of the Petroleum Exporting Countries, Haitham Al Ghais, has explained the real reason behind Nigeria’s rising fuel prices, clearing local operators like Dangote Refinery from the blame.
Al Ghais said the main cause of the high fuel prices lies in government taxes, especially in major oil-consuming countries.
Al Ghais explained in an article published on Tuesday that while crude oil powers many industries globally, it is a misunderstanding to think that oil producers are the ones profiting the most from fuel sales. He clarified that most of the revenue from fuel sales is earned by governments through taxes, not by oil-producing countries.
“Revenues are often generated, but they are predominantly earned by major oil-consuming countries through taxation,” Al Ghais said. He pointed out that countries within the Organisation for Economic Co-operation and Development (OECD) earn much more from the sale of petroleum products than OPEC member countries do from crude oil sales.
Between 2019 and 2023, OECD countries made about $1.915 trillion more every year from petroleum products than OPEC nations. In 2023, taxes made up around 44% of the final retail price of petroleum products in OECD countries. In some European countries, this number was even higher, exceeding 50%.
For Nigerians, this means the high fuel prices are not just about the cost of crude oil or refinery margins. “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 explained.
For example, in the UK, fuel duties are expected to bring in £24.7 billion for the government in 2023-24, showing how much governments rely on fuel taxes for revenue.
While oil-producing nations do make money from oil sales, a large part of this income is reinvested into keeping the oil supply flowing and maintaining global energy markets. According to Al Ghais, these reinvestments are important for ensuring the future supply of oil.
In conclusion, taxes are a key part of the fuel price that consumers pay, and they help support government services. Al Ghais also called for a change in how people see the issue, urging everyone to understand that both consumers and producers are part of the energy system.
This explanation offers Nigerians a clearer picture of why fuel prices are high, showing that taxes, not oil producers like Dangote, play a big role in what they pay at the pump.
