Government Taxes on Fuels: the figures that remain in the shadow of oil drums

 

taxes on fuel

The steep rise in oil price, relative to what it was around this time last year, has led to a brewing storm in the sphere of global politics with the OPEC+ at its centre.

The governments in question – or politicians for that matter – are looking for a scapegoat and they appear to have got a herd of them in their hour of need – the OPEC+.

With the price of crude oil at the current level, the oil producers just manage to balance their books, having suffered for years facing the plummeting oil price since 2014.

There were thousands of job losses; research and exploration activities came to a screeching halt without a warning out of the blue; hundreds of major projects were put on hold; millions of workers from poorer countries of Asia and Africa were compelled to stare at the grim pit of uncertainty and countries they hail from lost a vital stream of revenues that was essential for survival.

In short, the ‘collateral damage’ on the poorer countries in Asia and Africa was conveniently eclipsed by the disproportionate focus on the economic blow suffered by the major oil producing nations.

The collective action, coupled with teeth grinding determination, by the OPEC+ to keep the production at the current level, come what may,  has come under intense criticism by certain countries, especially after their recent meeting on March 4.

The countries in question hoped that OPEC+ would increase the production in order to bring the price of crude oil down and much to their dismay, it did not happen.

On the contrary, not only did OPEC+ maintain the current production level, but also let some nations increase the price of crude oil for Asia and the US.

These developments already created a diplomatic rift between Saudi Arabia and India, which usually used to be allies in the region, with the demand by the latter to increase the production.

That demand fell on deaf ears and instead, Saudis asked India to use the oil reserves that it filled up when the price was so low during the pandemic last year – until they ran out of storage capacity.

On the surface, the OPEC+ appears to be impervious to the global outcry that stems from the rising crude oil prices; if you scratch the surface of the oil drum that is being relentlessly beaten at present, however, a long list of shadowy figures emerges from below that usually is not in the public domain: huge taxes levied on fuel by countries that vary from nation to nation, something we hardly talk about.

This is something that the top players of the OPEC+ are aware of and they maintain a deafening silence on it without politically damaging their allies.

Indian oil minister, who became the voice of those who want higher oil production recently, has come under fire from regional governments over the taxes levied on fuel – a staggering 69%.

In addition, regional governments in India add their own taxes on top of that and distribution cost, coupled with commission for companies involved, also add up,  which in turn makes fuel pretty expensive in India.

Even in Europe, the drop of oil price during the pandemic did not materialize in the same proportion at the pumps owing to high taxes.

In this context, the viable substitute for these taxes on fuel, when Europe plan to turn its back on fossil fuels by 2030, has already become the elephant in the room.

That’s why some analysts fear that the green mission may have a sting in its tail in the long run.

 

 

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