UAE residents ought to have a strange love-hate relationship with the global oil price.
We all know and are made to understand by economists and experts that despite the ongoing diversification drive and healthy financial buffers, low oil prices aren’t good for the UAE’s finances in the long term.
However, we still can’t help but feel good about the savings we’ve been making every time we fuel up our cars thanks to the falling prices at the petrol pump, which are in turn due to the low global crude prices.
For the record, last month, on January 20, 2016, oil hit a 13-year-low of $26.15 per barrel, a level last seen in 2003.
During the subsequent 12 years, global oil price fluctuated, sometimes violently, between $26 and $147, but UAE residents remained shielded from the worst inflationary effects as the price at the pump remained subsidised even as it saw periodic price increases.
Fizzy drink for Dh1.5 for a 355ml can
A troika of petrol price hikes in 2010 saw the price of a litre of petrol in the UAE rise to Dh1.72 per litre for Special (95 octane) and Dh1.83 per litre for the Super grade (98 octane), and it remained at that level until July 2015.
The UAE prudently deregulated the petrol price with effect from August 1, 2015, and the price of a litre of petrol, which is now set on a monthly basis, is down to Dh1.47/l for the Special grade.
That makes it officially cheaper than a 1.5-litre bottle of water – or a 355ml can of Coke or Pepsi (or any fizzy drink, for that matter) or even a 250ml bottle of flavoured milk.
A quick search on the Dubai Economic Department’s price-comparison website Sallety.com proves it.
It is now more expensive to quench your thirst with Evian mineral water (Dh7.75 for a 1.5-litre bottle) or a fizzy drink (Dh1.5 for a 355ml can) from your neighbourhood convenience store than getting a litre of black gold in your car (Dh1.47 per litre for Special petrol).
200ml bottle of flavoured milk too costs Dh1.75
A 200ml bottle of flavoured milk too costs Dh1.75 or more while fresh milk (it was always more expensive than petrol in the UAE) now costing over three times more than a litre of petrol.
Good things, however, don’t last forever.
The UAE fuel prices are decided based on the average global crude prices during the previous month, with the addition of operating costs and profit margins of the distributing companies. February’s prices, for instance, are based on the average global prices for diesel and gasoline during the month of January, when prices fell to a 13-year-low.
Evian mineral water - Dh7.75 for a 1.5-litre bottle
The fag end of January, however, saw prices shoot up by about 30 per cent from the lows. Although they’ve been settling down a little again this week, prices have remained well above those lows.
Which means that UAE petrol prices for the next month are likely to be higher than this month’s, but not by a huge margin.