A day of reckoning for fuel prices in the Gulf | The Economist

A day of reckoning for fuel prices in the Gulf | The Economist:



"QUEUES at the pumps were only a few minutes longer than usual. There was little evidence of stockpiling. Aside from minor grumbling, July 31st passed like any other Friday in the United Arab Emirates. But the following day, petrol prices rose by almost 30%, to something close to their market value.



The relaxing of fuel subsidies—which in 2013 cost the government some $7 billion—puts the UAE at the vanguard of a long delayed reckoning in the Gulf. With falling global oil prices, the Arab Gulf states will miss out on an estimated $380 billion in export earnings this year, the International Monetary Fund estimates. Only Kuwait and Qatar will scrape by without a budget deficit, and all the region’s petrol states are being forced to look at cost-cutting.



What makes the UAE unique is its audacity in tackling the commodity many residents in oil-rich states see as their birth right: cheap petrol. The reforms, announced a week ahead of time, have pushed the price of their petrol to the highest level in the Gulf. In the next-highest, Oman, it is only about half as dear. The UAE's prices are not completely deregulated; they will be set monthly by a committee based on international prices. But August’s price is only 13 cents below the American retail price."



'via Blog this'