While OPEC members, Saudi Arabia and Mexico, will ditch artificially low petrol costs this year, as the increase in international oil prices combined with strained public finances make it too expensive to maintain artificially low prices, Nigeria has since resisted calls to review an 8-month old petrol price template which has been rendered obsolete due to higher crude oil prices and a weaker naira.
Jose Antonio Meade, Mexico’s Finance minister defends the price hike in Mexico by arguing that keeping gasoline costs artificially low following an increase in international oil prices was too expensive for public finances.
Mexico’s new petrol price ceiling would be 14.2 percent to 20.1 percent above current prices while Saudi Arabia, though yet to quantify the increase, will also raise prices in a phased manner between 2017 and 2020.
Mexico’s planned hike is the first time in 80 years that Latin-American country will review its petrol prices upwards.
Nigeria is the world’s least wealthy country still offering its citizens fuel below $0.5/litre (pre-deregulation)
Populists are wrong to suggest that Nigeria should keep petrol prices low just because other energy exporters do so. These other countries export far more energy per capita and are far wealthier, and can therefore better afford petrol subsidies.
Taking a look at countries with petrol prices below $0.5/litre, one can conclude that no country as poor as Nigeria (in terms of per-capita GDP) was keeping petrol prices as low as $0.44/litre (Nigeria’s petrol price pre-deregulation) as of 9 May 2016.
Nigeria is the least wealthy country selling petrol below $0.5/litre. The UAE sells petrol at $0.45/litre, but its per-capita GDP is 11.3 times greater than Nigeria’s.
No single country offering fuel that cheaply has 2016 per-capita GDP below $4,000, except Nigeria.
