Haitham Al Ghais, Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), has pointed to tax policies imposed by major oil-consuming nations as the primary factor driving fuel costs, rather than fluctuating oil prices. His remarks were made in a recent statement as Nigeria grapples with multiple increases in petrol prices over the past year.
On Monday, the Nigerian National Petroleum Company Limited announced a new hike in pump prices, raising the cost of petrol to between N950 and N1,019.22 per liter. This increase is part of a broader trend of rising fuel costs that has affected consumers in Nigeria and beyond.
Al Ghais elaborated on the complexities that influence retail fuel prices, noting that they are determined by a variety of factors, including crude oil prices, refining, transportation, marketing expenses, oil company profit margins, and notably, taxes. He emphasized that while oil-producing countries typically reinvest a significant portion of their oil revenue into exploration, production, and transportation projects, consuming nations benefit from substantial tax revenues on petroleum products.
According to Al Ghais, the average share of taxes in the final retail price of fuel in 2023, as reported by the Organisation of Economic Co-operation and Development (OECD), rose to approximately 44 percent, reflecting a year-on-year increase.
“Consequently, for many consumers, taxes can play a more pivotal role than the crude oil price itself in determining how much they feel the impact at the pump,” he stated.
He also acknowledged the sovereignty of governments to develop their own tax systems but urged that discussions around high pump prices and their effects on disposable income should consider the substantial tax revenues directed to finance ministries worldwide.
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