OPEC reveals real reason behind high fuel prices in Nigeria

The soaring fuel prices in Nigeria have been a major source of public frustration, with many attributing the high costs to local oil operators like Dangote Refinery.

However, OPEC Secretary General Haitham Al Ghais has illuminated a more complex issue, revealing that government taxation is the primary culprit behind high fuel prices, not oil producers.

In a revealing statement published on Tuesday, September 17, Al Ghais clarified that contrary to popular belief, oil-producing countries like Nigeria do not significantly benefit from the retail sale of fuel.

Instead, major oil-consuming nations accrue substantial revenues through heavy taxation.

“Revenues are often generated, but they are predominantly earned by major oil-consuming countries through taxation,” Al Ghais stated.

This underscores that OECD (Organisation for Economic Co-operation and Development) countries earn significantly more from petroleum products than OPEC nations.

Between 2019 and 2023, OECD countries raked in approximately $1.915 trillion more annually from petroleum products than OPEC members.

In 2023, taxes accounted for around 44% of the final retail price of petroleum products in OECD countries, with some European countries seeing figures exceeding 50%.

This data highlights that taxes drive the bulk of the fuel price at the pump rather than crude oil prices or refinery margins.

Al Ghais pointed out that the high fuel cost in Nigeria and globally reflects a combination of crude oil prices, refining, transportation, and, crucially, taxation.

In the UK alone, fuel duties are projected to generate £24.7 billion in revenue for 2023-24, illustrating the global trend of governments leveraging petroleum products for revenue.

While oil-producing nations benefit from oil sales, a significant portion of this revenue is reinvested into exploration, production, and infrastructure to ensure ongoing supply and market stability.

Al Ghais called for a shift in the narrative to recognise the role of taxation in fuel pricing and urged a more nuanced understanding of the energy ecosystem, where both consumers and producers are vital stakeholders.

This revelation from OPEC serves as a stark reminder of the intricate factors influencing fuel prices, where taxation emerges as a major player in the cost consumers face at the pump.