OPEC: High Taxes, Not Crude Oil Rates Raising Fuel Pump Price

The Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), Haitham Al Ghais, has argued that taxes collected by several governments and not necessarily crude oil prices were the cause of rising fuel pump prices.

In an article, the OPEC scribe insisted that the world would not function without crude oil and its associated products, explaining that for consumers, it delivers petrol, diesel and a host of other transportation fuels, and enables the development of plastics, pharmaceuticals, medical supplies and much more.

For producers, the revenues derived from the natural resource, he said, are vital for their economies and populations.

“The narrative we often hear is that every increase in price raises fuel costs, bringing increasing revenue for oil producers, to the detriment of consumers. This narrative can lead to finger pointing and pit consumers against producers, rather than acknowledge that all are stakeholders in the energy industry, with legitimate needs and concerns. Furthermore, this narrative does not tally with the facts. 

“It is important to recognise that the price paid by consumers at the pump is determined by a number factors: the price of crude oil, refining, transportation and marketing costs, oil company margins and taxes. Breaking this down provides some enlightening insights and figures. Revenues can indeed be generated, but analysis shows that they are earned primarily by major oil consuming countries via taxation,” he maintained.

For example, he stressed that rich economies earn far more revenue from the retail sale of petroleum products than OPEC countries make from the original sale of their oil.

“From 2019 to 2023, the Organisation for Economic Co-operation and Development (OECD) economies earned on average about $1.915 trillion/year more (based on weighted average prices) from retail sales of petroleum products than OPEC member countries made from oil revenues. A significant amount of the final retail prices of petroleum products is attributed to taxation.

“In fact, during 2023, the OECD average share of total tax on the final retail price increased year-on-year and amounted to approximately 44 per cent, and for some countries it was even more. Across the year, in several European countries, taxes represented more than 50 per cent of the final retail price,” he pointed out.