Nations with cheapest petrol – UAE not on list

A new global survey has revealed the top 10 countries with cheapest retail prices for petrol, and the UAE isn’t among the rankings.

According to Staveley Head, a UK-based provider of specialist insurance products, every other Gulf Cooperation Council (GCC) member makes it to the top 10 countries with cheapest petrol prices in the world.

Nevertheless, there are more surprises in the list.

The top spot for cheapest fuel in the world isn’t a city in Saudi Arabia, the country with one of world’s largest known oil reserves and the world’s largest exporter of crude, but Caracas in Venezuela, where petrol can be bought for as low as £0.02 (less than 12 fils) per litre. "Is Hugo Chavez proving a point to the Western world?," the folks at Staveley Head ask in the report.

Saudi Arabia’s Riyadh indeed follows Venezuela on the list, and according to Staveley Head, the average petrol price in the Kingdom, at £0.08 (46 fils) per litre, is four times that of Venezuela’s. Saudi Arabia has "20 per cent of the world's oil reserves," the report reckons. "They'll remain one of the cheapest till the end," it predicts for petrol prices in the Kingdom.

The Top 10 list has a handful of countries affected by the Arab Spring, suggesting that people in these countries were seeking many more economic and social reforms than just a fuel subsidy.

Tripoli in Libya is third on the list, where petrol retails for £0.09 (52 fils) a litre. With 41 billion barrels of oil per year, Libya is the ninth largest oil-producing nation in the world. In the cheap fuel rankings, it is followed by Ashgabat in Turkmenistan (average petrol price £0.12, or 70 fils/litre). "Car drivers are entitle[d] to 120 litres free per month, so maybe the price isn't important," the report adds.

Rounding up the Top 5 is Manama in Bahrain, where a litre of petrol can be bought for as much as £0.13 (75 fils) and as per the report, "60 per cent of the government's revenue comes from oil production".

Others in the Top 10 include Kuwait City, Kuwait (£0.14 or 81 fils/litre); Doha, Qatar (£0.15 or 87 fils/litre); Cairo, Egypt (£0.19 or Dh1.1/litre); and Muscat in Oman and Algiers in Algeria, which share a common petrol retail price of £0.20 or Dh1.16/litre.

Oslo in Norway is the most expensive place in the world to top your fuel tank, according to the report, and a litre of petrol costs £1.64 (Dh9.5) in addition to a carbon dioxide tax of £0.10 (57 fils) per litre, making driving your own vehicle a luxury only few can afford.

Click here to view a graph with Top 10 nations with cheapest petrol prices

In Dubai, the basic grade of petrol at local filling stations (Enoc and Eppco) costs Dh1.72 (£0.29) a litre after two price hikes last year, which added about 25 per cent to retail petrol price, although Abu Dhabi’s Adnoc continues to retails petrol at lower than that.

With global oil prices now hovering above $100 per barrel, UAE oil distribution firms are incurring losses amounting to billions of dirhams in subsidies every year.

“The losses of oil marketing and distribution companies are estimated at about Dh3bn ($817m) just in 2009,” the Economist Intelligence Unit (EIU), a research firm, estimated in a report it published last year.
“The losses were particularly acute in 2008, when oil prices reached record levels, but they accumulated again this year (2010) as prices crossed the $80/barrel mark,” the EIU confirmed.

A statement issued last year by local distributing companies, when they raised the prices for a second time that year, said they were looking to increase fuel prices gradually to get them on a par with international prices.

“The announced rise comes within efforts to gradually mitigate accumulated and growing losses these companies are sustaining due to continuous surge in cost of the product,” the statement said.
However, prices have held steady since last year’s two hikes, and commentators believe that unrest in some of the other countries in the region may delay any UAE decision on further fuel price hikes.

The International Monetary Fund (IMF) has recommended that countries in the region 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 a 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 (46 US cents) litre, which is four times as high as in Saudi Arabia, and more than triple the price in Qatar.

Click here to view a graph with Top 10 nations with cheapest petrol prices

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