There is a foundational promise embedded in the idea of a functioning market, whether you call it capitalism or simply a fair economy: consumers are not to be left helpless. They are not lambs to be shorn at the whim of those who control the supply of essential goods. A system that abandons its citizens to the mercy of price fixers isn’t a market economy; it is a rope of chaos, and any government that pulls that rope is abdicating its most basic duty.
We have arrived at a critical juncture in our economic story. The Dangote Refinery, a monumental feat of industrial will, is online. For decades, we were held hostage by the logistics of importing fuel. Now, we produce on home soil. The promise was population, from the volatility of international shipping, from the phantom subsidies that bled our treasury dry. But if the result of this liberation is that Nigerians are simply handed a new, higher bill to pay overnight, then we have merely traded one form of exploitation for another. This is not what we bargain for.
To understand why current price hikes are unjust, we must first acknowledge the fiscal shift that occurred in May 2023. Before that point, the government was caught in a perverse cycle. When global crude prices rose, government revenue rose. That is the good news. But simultaneously, the cost of the fuel subsidy, the difference between the market price and the fixed pump price, also ballooned. It was a game of robbing Peter to pay Paul; the fiscal gains from higher crude prices were largely washed away by the rising tide of subsidy payments.
Today, the mathematics has changed. The subsidy is gone. Now, when global crude prices increase, the government is a net gainer. Higher crude prices mean higher revenue for the federation, and without the offsetting leakage of subsidy payments, the fiscal position strengthens. This is precisely how it should work. The government wins.
But in this new equation, there is a tragic loser: the Nigerian consumer. When crude prices climb, the cost of a litre of refined fuel climbs with it. This cost is passed down the chain with ruthless efficiency, landing squarely on the shoulders of citizens whose incomes are, for the most part, stuck in the mud.
For the average Nigerian worker, a 30% increase in the global price of crude does not precede a 30% increase in their salary. It simply acts as a brutal, regressive consumption tax on everything, transportation, food, power, and manufacturing.
The situation has been aggravated by the recent and frankly needless escalation of geopolitical tensions between Iran, the U.S., and Israel. Since the conflict flared, crude prices have soared by approximately 30%. It is a sharp spike, and one would logically expect an adjustment in the price of derivatives like Premium Motor Spirit (petrol). The problem is not the adjustment; the problem is the margin.
We have observed that pump prices have risen by roughly the same percentage, that 30% spike in crude has been met with a 30% spike at the pump. On the surface, to the untrained eye, this might look like simple arithmetic. But it is economic nonsense.
Let’s break down the cost of a litre of fuel. It is not a pure, direct reflection of the cost of a barrel of oil. Crude oil is the primary raw material, a major cost component, yes. But it is not the only cost.
Consider labour. The salaries of refinery workers, truck drivers, and station attendants did not suddenly increase by 30% because of a conflict in the Middle East. Wages are sticky; they do not fluctuate with the weekly commodities market. In the short term, labour costs are fixed.
Consider finance. The cost of capital—the interest on the loans used to build the refinery and operate the business, should, all things being equal, be on a downward trend in an environment of liquidity easing. It is certainly not spiking in tandem with crude prices.
Consider other operational inputs—maintenance, logistics, administrative overhead. Have these all miraculously risen by 30% as well? It is highly improbable.
Unless every single input cost—labour, finance, transport, and administration—has increased by the exact same margin as crude oil, there is no economic justification for a flat 30% increase in the final price of fuel. By matching the crude price hike percentage for percentage, the refiners and marketers are not merely covering their costs; they are engaging in rent-seeking. They are treating the consumer as a simple extension of the global commodities market, expecting them to absorb the full volatility of crude while the businesses pocket the windfall from the other, unchanged cost components.
In a properly functioning market, if your raw material cost goes up by 30%, but your labour and finance costs stay flat, your total cost base might rise by, say, 15% or 20%. The final price should reflect that blended reality. To pass on the full 30% is to profiteer. It is an arbitrary tax on Nigerians, disguised as a market correction.
So, where is the resistance? Where is the pushback that protects the citizenry from this economic injustice?
This is where the government cannot cherry-pick its responsibilities. It cannot celebrate the fiscal benefits of subsidy removal—the strengthened revenue position—while ignoring the plight of the consumer who now bears the full, unmitigated weight of global price spikes. The government is now a net gainer from high crude prices. A portion of that gain must be used to cushion the consumer from the volatility of the market. That is not socialism; that is good economic governance.
Furthermore, this is the moment for consumer protection agencies to earn their keep. They should be demanding transparency. They should be asking for the cost models of the refiners and the major exporters. Show us the books. Break down the cost per litre. Prove that the 30% increase at the pump is a reflection of your actual increased cost of business, and not just a convenient way to expand your profit margin at the expense of a captive population.
We built a refinery to end the importation of fuel, not to import the full, unfiltered volatility of the global oil market directly into the pockets of Nigerian families. We must remember that the goal of economic policy is not just to balance the government’s books, but to ensure the survival and prosperity of the people who fund those books. If we fail to police this gap between economic reality and opportunistic pricing, we will have swapped a subsidy leak for a consumer bleed, and the rope of chaos will only tighten.
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