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OPEC Explains Why Fuel Prices are High in Nigeria; See Reasons

Published by admin on September 19th, 2024.

OPEC Explains Why Fuel Prices are High in Nigeria; See Reasons

The recent increase in fuel prices in Nigeria has raised significant concern, with many blaming local producers like Dangote Refinery. However, OPEC Secretary General Haitham Al Ghais clarified that the primary reasons for these high costs stem from government taxes, particularly in major oil-consuming countries.

In an article released on Tuesday, Al Ghais outlined how crude oil and its derivatives are essential to various global industries, from transportation to pharmaceuticals. He countered the common belief that rising oil prices primarily benefit producers, emphasizing that oil-producing nations do not reap the majority of profits from retail fuel sales.

“Most revenue generated comes from taxes imposed by major oil-consuming countries,” Al Ghais stated, highlighting that OECD (Organisation for Economic Co-operation and Development) countries gain significantly more from petroleum product sales than OPEC nations earn from crude oil.

From 2019 to 2023, OECD countries earned approximately $1.915 trillion more annually from petroleum products than OPEC countries. In 2023, taxes made up about 44% of the final retail price of petroleum in OECD nations, with some European countries seeing figures exceeding 50%.

For consumers in Nigeria, this underscores that the high cost of fuel isn’t solely due to crude oil prices or refinery profits. A considerable portion of the price at the pump is attributed to government taxes. “The consumer price at the pump is influenced by multiple factors, including crude oil prices, refining costs, transportation, and importantly, taxes,” Al Ghais noted.