OPEC Secretary General, Haitham Al Ghais, has highlighted that taxes in major oil-consuming nations play a more significant role in gas prices than commonly recognized. In an article on OPEC’s website titled “Most of what you pay at the pump is taxes,” Al Ghais emphasizes the importance of crude oil and petroleum products for the world’s normal functioning.
He challenges the common narrative that oil price increases only benefit producers at the expense of consumers. Al Ghais argues that this perspective can create tension between consumers and producers, rather than recognizing their shared interests in the energy sector.
The secretary general provides data indicating that from 2019 to 2023, developed economies earned approximately $1.915 trillion more per year from retail sales of petroleum products than OPEC member countries earned from oil revenues. This suggests that for many consumers, taxes can be a more substantial factor in gas prices than the crude oil price itself.
Citing the U.S. Energy Information Administration (EIA), Al Ghais notes that in the past year, the average retail price of a gallon of gasoline was $3.52, with crude oil accounting for 52.6% of this cost and federal and state taxes making up 14.4%. Over the decade leading up to 2023, crude oil’s share was similar at 52.3%, while taxes constituted 17.3% of the gasoline price, with an average U.S. price of $2.83 per gallon.
Al Ghais concludes by suggesting that governments aiming to capitalize on petroleum’s revenue potential while phasing out oil should consider how they will replace the lost taxes from petroleum products. He poses the question of whether similar tax levels might need to be applied to other energy sources.