M.K.O. Abiola of blessed memory was asked by a journalist if he could contemplate increasing the price of petrol if he becomes the president of Nigeria.
Abiola laughed and answered as follows:
"You know I am a chartered accountant. If anybody confronts me with the idea that fuel price should be increased, the first question I will ask is, how much does it cost to produce a litre of petrol, minding the other derivatives from crude?
Abiola concluded that we might be producing a litre of petrol at zero cost, taking into consideration the other derivatives from crude oil.
For a price to be established, you must know your cost of production or procurement, then do a plus and minus to arrive at your profit margin. From all the discussion and writeups that I have seen, nobody has been able to ask the vital question when it comes to petrol pricing as posed by M.K.O. Abiola to the journalist.
The conclusion one can make is that our leaders do not have the interest of the people when it comes to issues that have to do with the living standards of the people. They would rather prefer to see the people continue to suffer. So, even the issue of petrol subsidy is a scam. How can you be subsidising a product that you produce or procure at zero cost?
Below is another post that will further bring lucidity to the point M.K.O. Abiola was trying to make to the journalist.
I turned to Meta AI today, having listened to the on going drama in our oil sector.
Meta; I wrote, can you talk about the petroleum industry? Meta affirmed that it can, and in fact I should feel free to ask any question in the industry, it added. Eweee!..I exclaimed 😄
So, I asked it to give me a breakdown of all the derivatives from one barrel of crude oil, especially Nigeria's type, the Bonny light.
Meta bombarded me with info, almost making me dizzy; that Nigerian crudes among which is Bonny Light, are among the most sought after in the world; Brent from North Sea, Dubai from Middle East, Bonnia from Malaysia, Bonny from Nigeria and Kirkuk from Iraq. And then it mentioned this about our Bonny Light:
- Low Sulfur Content (less than 0.5%)
- High API Gravity (above 35°)
- Balanced Product Yield (favorable distribution of gasoline, diesel, and jet fuel)
- Low Heavy Metals and Contaminants
Meta continued:
"According to various sources, including the Nigerian National Petroleum Corporation (NNPC) and industry reports, here's a typical yield per barrel of Bonny Light crude:
- Gasoline (PMS): 12.5 gallons (47.3 liters)
- Diesel: 9.5 gallons (36.0 liters)
- Jet Fuel (Kerosene): 3.5 gallons (13.2 liters)
- Fuel Oil: 6.0 gallons (22.7 liters)
- Petrochemicals: 2.5 gallons (9.5 liters)
- Other products (e.g., asphalt, lubricants): 1.5 gallons (5.7 liters)
Total yield: 42 gallons (159 liters) per barrel.'
I thanked Meta and asked my final question, " Can a refinery give free pms and be able to recover costs and still make profits from other crude oil products?"
It answered 👇
'Yes, a refinery can recover costs and make profits from other crude oil products even if it gives away gasoline (PMS) for free. Here's a breakdown:
- From a barrel of Bonny Light crude, the refinery gets:
- Diesel: 9.5 gallons (36.0 liters) - high margin product
- Jet Fuel (Kerosene): 3.5 gallons (13.2 liters) - high margin product
- Fuel Oil: 6.0 gallons (22.7 liters) - moderate margin product
- Petrochemicals: 2.5 gallons (9.5 liters) - high margin product
- Other products (e.g., asphalt, lubricants): 1.5 gallons (5.7 liters) - high margin product.
These products have varying profit margins, but diesel, jet fuel, and petrochemicals typically have higher margins than gasoline. If the refinery can sell these products at market prices, it can recover costs and generate profits.
Assuming an average profit margin of:
- 10% for diesel
- 15% for jet fuel
- 12% for petrochemicals
- 8% for fuel oil
- 15% for other products
The refinery can generate significant profits from these products, even if gasoline is given away for free. However, this depends on various factors, including:
- Refinery efficiency and costs
- Market demand and prices for the products
- Competition and market dynamics'
This cannot be true. Can it?
If this is true, then Nigeria is being scammed with the expected high petrol price from Dangote refinery. *copied*
