Peninsula - 27/4/2006

Opec has released figures that suggest that much of what the end-user pays for oil goes to the industry and the governments in the form of taxes.

A barrel roughly equals 42 US gallons or 159 litres. Among the G-7 nations, oil is the cheapest in the US. The revenue from oil per litre is split equally between Opec on the one hand, and the industry and taxation, on the other.

In Japan, the industry margin is the maximum, while in Germany and Italy, they are the lowest

"Filling up your tank can be an expensive business, but what is not generally known is just where most of that money goes," explains an Opec brochure distributed on the sidelines of the 10th International Energy Forum that concluded here on Monday.

Regional variations in product prices are not due to differences in crude rates, but to widely varying levels of taxation in the consuming nations of the G-7.

These can range from relatively modest taxes (although by no means insignificant) in the US and Canada, to very high levels in many European countries.

In the UK, for instance, the government receives around four times more from taxation than what Opec gets from the sale of its oil.

Between 2000 and 2004, the G-7 nations (USA, Canada, Japan, France, Germany, Italy and the UK), made a total of $1,600bn from oil taxation.

This compares with the rveneue of just $1,300bn for the Opec member countries over the same period.

In addition, while the $1,600bn in oil taxation by the G-7 is pure profit, this is not the case for the Opec nations. These countries have to meet the cost of finding, producing and transporting that oil from their $1,300bn income.

Over the five-year period from 2000 to 2004, while the Opec nations averaged $250bn per year in sales revenue, the G-7 countries raked in as tax income, $320bn, that is, $70bn per year more than Opec.

"It can thus be clearly seen that the real burden on the consumer is taxation in the consuming countries.

If gasoline were not so heavily taxed in countries such as the UK, Japan, France, Germany and Italy, it would only be a fraction of the current price.