For those of us in the UAE complaining about the rising cost of vehicle ownership thanks to two new tollgates coming up in mid-April, here’s some news.
The UAE boasts of the fifth cheapest petrol prices in the whole wide world – in fact, we pay less than one-fifth of the money that consumers pay for petrol in Turkey, which has the world’s most expensive petrol prices.
According to the Bloomberg Gas Price Ranking, which rates 60 countries by average retail price and by “pain at the pump,” petrol in Turkey retails at an astounding $9.89 per gallon. Compared with that, the $1.77 per gallon that we pay in the UAE can be considered a steal.
Where can you find the cheapest petrol? Well, since you asked, it’s Venezuela, where a gallon of refined black gold retails for less than what you’d give your kid in daily pocket money – it’s $0.06 for a gallon. Not sure why they charge customers at all!
The second on the list of the world’s cheapest petrol prices is GCC peer Saudi Arabia, where petrol retails for as cheap as $0.45 per gallon, followed by Kuwait ($0.81 per gallon), and then Egypt ($1.14 per gallon).
While the UAE follows Egypt as the cheapest destination to fill up your car tank on the Bloomberg Gas Price Ranking, there are other countries that Bloomberg doesn’t include in the list but where a gallon of petrol costs less than the UAE.
Neighbouring Oman, for instance, retails petrol at cheaper than what it is sold in the UAE, as do other Arab nations such as Libya, Qatar, Bahrain and Algeria.
While the prices of petrol in the UAE remains one of the cheapest in the world, if these countries were indeed included in the ranking, the UAE wouldn’t feature among the Top 10 nations with the cheapest petrol prices.
Nevertheless, global financial advisory bodies including the International Monetary Fund (IMF) have long recommended that countries in the Gulf region must end explicit fuel subsidy in order to reform their consumption patterns and enhance industrial efficiency.
“A number of governments have recently become increasingly concerned about the fiscal costs of such subsidies, the corresponding waste of resources, and the dependence of the industrial base on indefinite subsidies,” the IMF said in an earlier report.
“Accordingly, some countries have begun to tackle these issues. An essential first step to that end is to identify subsidies explicitly in the budget,” it added.
The IMF report maintained that “Over the medium term, all oil producers – to differing degrees – will need to pursue fiscal consolidation to safeguard the sustainable use of hydrocarbon revenues, while promoting diversification and employment creation.
Measures to support these goals include reorienting spending toward social and development needs, revisiting energy subsidies, and diversifying the revenue base.”
Nevertheless, governments understand that raising fuel prices a double-edged sword. While it does increase government revenues, the impact on overall inflation cannot be written off, especially if the price rise is significant.
Following the last rise of 20 fils in July 2010, the cost of fuel in the UAE is the highest in the GCC at Dh1.72 ($0.46) per litre.