July 2009

Graph 1:
Who gets what
from a litre of oil in 2008?
Who gets what from a litre of oil in the G7?
Who gets what from a litre of oil in the G7?

US$/Litre
$/litre
US$/Litre
USA UK
USA
Germany
Canada
CanadaItaly
Japan
Japan
France
France
Japan
France
Germany
Canada
Germany
Italy
USA
Italy
0 0.25 0.50 0.75 1 1.25 1.50 1.75UK 2
UK
0.0 0.25 0.50 0.75 1.00 1.25
0.0 0.25 0.50 0.75 1.00 1.25

Tax
Tax
Tax
Industry margin
Includes
Industry transport,
margininsurance and other costs
Industry margin
Includes transport, insurance and other costs
Crude fob price
Crude fob price
Includes
Crude fobcost price
of production and other related expenses
Includes cost of production and other related expenses

Notes:
1. Figures are estimated prices in US dollars per litre for the
Notes:
year 2006
1. Figures are estimated prices in US dollars per litre for the
2. Unleaded
year 2006 premium (95 RON) gasoline for France,
Notes:
2. Germany,
Unleaded
Figures Italy, UK;
premium
are estimated (95regular
prices in USunleaded
RON) gasoline
gasolineper
dollars forlitre forthe
France,
for Canada,
year 2008.
Japan
Industry and
Germany,
margin USA
Italy, UK; transport
includes regular unleaded gasoline
, insurance for Canada,
and other costs.
Japan
Crude fob and USAincludes cost of production and other related
oil price
Source: Research Division, OPEC, Vienna, Austria, 2007
expenses.
Source: Research Division, OPEC, Vienna, Austria, 2007
Source:
Research Division, OPEC , Vienna, Austria, 2009.
 Many misconceptions surround crude oil prices
and the pricing of petroleum derivatives such as
gasoline. This brochure illustrates and explains
exactly who gets what from the price of oil.

As every consumer knows, purchasing petroleum

products can be expensive. But what is not gener-
ally known is where most of that money goes.

Graph 1 illustrates the wide variations in the price of

a litre of oil in G-7 countries. Those variations are not
due to differences in crude oil prices but to varying
levels of taxation in those consuming nations (e.g.,
Canada, France, Germany, Italy, Japan, the UK and
the USA). These taxes can range from relatively mod-
est (although by no means insignificant) in Canada
and the USA, to very high levels in many European
countries.

In the UK, for example in 2008, the government re-

ceived around 1.8 times more from taxation than what
OPEC Member Countries obtained from the sale of
their oil.

Graph 2 shows that over the period 2004–08, the

G-7 nations received a total of $3,418 billion from oil
taxation. OPEC Member Countries, on the other hand,
received just $3,346 billion in total revenues over the
same period.
But while the $3,418 billion generated by G-7 govern-
ments from oil taxation is pure profit, the same can-
not be said of the revenues received by OPEC Member
Countries, which must cover the high costs of explo-
ration, production and transportation.

Graph 3 shows the annual average revenues of G-7 and

OPEC Member Countries over a five-year period. While
OPEC Member Countries generated an average of $669
billion per year from oil sales, the G-7 countries received
an average of $684 billion per year from oil taxation
— about $15 billion more per year than OPEC Member
Countries.

Thus, it is clear that the real cost burden on end-

users is from the oil taxes imposed by consuming
countries.

If oil were not so heavily taxed, then it would certainly

cost only a fraction of its current price. Graph 4 (on
the reverse) gives a country-by-country break-down
of the nominal costs of each barrel of oil in G-7 coun-
tries, relative to oil taxes and industry margins, for
the 2004–08 period.

Wherever you live, the role of government taxes

on the price of oil and oil products is something
to think about.
 Graph 2:
Taxes vs. revenue

$3,418 billion $3,346 billion

3,500
3,000
2,500
2,000
1,500
$3,418 billion $3,346 billion
1,000
3,500
500
3,000
2,5000
Estimated total Estimated total
2,000 G-7 oil taxes OPEC oil revenue
1,500 2004–08 2004–08
1,000
500
0
Estimated total Estimated total
$684
G-7 billion
oil taxes OPEC$669 billion
oil revenue
700
Graph 3: 2004–08 2004–08
600
Average taxes vs. revenue
500
400
300
$684 billion $669 billion
200
700
100
600
5000
Estimated average Estimated average
400 annual G-7 oil taxes annual OPEC oil revenue
300 2004–08 2004–08
200
100
0
Estimated average Estimated average
annual G-7 oil taxes annual OPEC oil revenue
2004–08 2004–08
Graph 4:
Composite oil barrel analysis
for G-7 countries
(in nominal dollars per barrel)

USA Canada
USA Canada
300 300

250 250

200 200

150 150

100 100

50 50

0 0
2004 05 06 07 08 2004 05 06 07 08

Japan Italy
Japan Italy
300 300

250 250

200 200

150 150

100 100

50 50

0 0
2004 05 06 07 08 2004 05 06 07 08

UK Germany
300 300
Note:
250 barrel equals 42 US gallons, or 159
One 250
litres.
200 200

150 150
 200 200
200 200

150 150
150 150

100 100
100 100

50 50
50 50

0 0
0 2004 05 06 07 08 0 2004 05 06 07 08
2004 05 06 07 08 2004 05 06 07 08

UK Germany
UK Germany
UK Germany
300 300
300 300
250 250
250 250
200 200
200 200
150 150
150 150
100 100
100 100
50 50
50 50
0 0
0 2004 05 06 07 08 0 2004 05 06 07 08
2004 05 06 07 08 2004 05 06 07 08

Canada
Canada
France
France
France
300
300300 taxTax
300 tax
250
250250 industry
250 Canada Industry
industry margin
200 Includes transport,
crude
200300
200 crude
200
150 taxinsurance and other
150250
150 costs
150 industry
100
100100
200
100 Crude
crude fob price
50
50150
50 Includes cost of
50 production and other
0
01000 2004 05 06 07 08 related expenses
05 0506 0607 070808
2004
0 2004
2004 05 06 07 08
50

0
2004 05 06 07 08
Italy
Italy
300
300
250
Sources:
250
OPEC Italy , 2009,, based on data from: OECD, Energy
Research Division
200
Prices
200
300 and Taxes ; Oil Bulletin Petrolier; Energy Detente.
150
150
250
100
100
www.opec.org