The sharp reversal of crude oil’s recent bull run has exposed an uncomfortable truth about the Nigerian downstream petroleum market: while prices respond to bad news with the speed of a rocket, they embrace good news with the reluctance of a feather. Elsewhere, including the United States, refiners and traders have only demonstrated that greed is a major variable in the pricing model. But in Nigeria, they have shown that, beyond other cost components, profiteering is the major determinant of the price of a litre of refined products.

In a rare public rebuke of America’s powerful oil industry, last week, President Donald Trump accused “big oil companies” of exploiting motorists by refusing to reduce pump prices in proportion to the significant crash in crude oil. His complaint deserves attention, not because it is politically convenient, but because it reflects an economic reality that many consumers understand instinctively. When geopolitical tensions in the Middle East pumped Brent crude to over $115 per barrel in May, refiners and marketers wasted no time adjusting pump prices upward. They relied on futures prices, anticipated supply disruptions and replacement costs to justify immediate increases.

At the beginning of March, the news of the pump price increase came to some Nigerian consumers, rather than the remote cause of the increase – the U.S./Israel-Iran conflict. Refineries and importers had increased the prices of fuel and diesel on account of higher prices in the futures market and impending supply disruptions. Understandably, during uncertainty, sellers switch to the expected restocking cost in price determination. This seems to apply to the downstream sector of the petroleum industry more than any other market.

But what is immoral is to keep prices at a historically high level, using old stocks as an alibi. Today, with Brent surrendering more than one-third of its value and trading below February levels, that same urgency of pump price increases the marketers invoked from March to May has mysteriously disappeared.  Watching the oil market over the past few days has been an astonishing exercise. Prices have shed cents almost minute by minute, each trading session erasing another layer of the war premium that had been built into retail pump prices and passed to the consumers. Yet the figures displayed on filling station forecourts remain remarkably stubborn, as though they belong to an entirely different market.

Trump’s expectation is straightforward. If crude prices are “falling like a rock,” as he put it, retail fuel prices should also reflect that reality. By his estimation, the average price of fuel ought to have slipped comfortably below the $3 mark. It is a simple question of consistency. Markets cannot celebrate efficiency only when prices are rising while conveniently discovering complexities whenever prices begin to fall.

If the President of a country where the average minimum wage exceeds $10 per hour considers the pace of fuel price reductions unacceptable, one can only wonder what goes through the mind of a Nigerian worker who now has to spend N3,000 on daily commuting to keep a job where he is paid N80,000 in a month. Unlike his American counterpart, he has neither a vocal consumer protection system nor a government that is willing to publicly challenge downstream operators on his behalf.

Sadly, energy costs do not rise alone, all over the world. They pull along prices of other commodities – food, health, education and others. Hence, Nigeria has seen renewed price pressure across the board in the past three months, leading to a significant spike in the speed of headline inflation in April and June. This pass-through impact on general prices is one compelling reason the greed in the energy market cannot be left unchecked. Whereas the rocket-and-feather effect in the petroleum market is a global phenomenon, some other markets have seen a significant reduction in pump prices. For instance, in the U.S., prices have dropped by as much as 30 per cent in some states. Nigerian consumers, by comparison, have received little more than a symbolic concession – barely 10 per cent despite about a 40 per cent crash in the prices of crude from their May peaks.

Nigerians are not convinced that the 10 per cent price cut so far fully exhausts the ease that comes with the ceasefire in the Middle East. Of course, there could be a lag between when crude price drops and when that translates to real-time lower refining cost. But considering that crude, which has even dropped sharply, is only 70 per cent of the total cost outlay of refineries, there is no sufficient explanation for the 50 per cent mark-up consumers are still paying in relation to February baseline prices. It is unfair that consumers have become the unfortunate financiers of the market asymmetry, but worse that nobody is speaking for them – not the President, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), nor the Federal Competition and Consumer Protection Commission (FCCPC). Consumers cannot permanently bear the burden of market volatility while operators retain every windfall.

Indeed, fuel prices in Nigeria may remain elevated for weeks, perhaps months, without any meaningful intervention from regulators. The silence has become predictable. The downstream market has increasingly evolved into one where price increases are quickly defended as unavoidable consequences of international developments, while price reductions become trapped in endless explanations about inventories, logistics, exchange rates and operational costs. But stripped of these technical arguments, much of the delay represents rent-seeking, a problem fuelled by regulatory laxity. The FCCPC has issued a statement, but the situation warrants more than just sound bites.

Markets function efficiently only when institutions prevent dominant players from converting temporary market distortions into permanent profits. Nigeria was promised a liberalised market when the subsidy was taken off.  That promise must serve the interests of all market participants and not one section. It must also not create a loophole for exploitation. To achieve this, the authorities must start by building a market that supports competition and efficiency.

Nigerian consumers deserve more than sermons during a crisis. They deserve market justice that restores full price adjustment at the fastest speed when the crisis has passed. Deregulation should not mean robbing buyers to pay sellers.