United Arab Emirates to nix subsidized gasoline prices
Officials in United Arab Emirates plan to get rid of subsidized prices for gasoline and bring prices in line with international rates.
Vehicles wait to buy fuel at a petrol station on Wednesday, July 22, 2015, in Dubai, United Arab Emirates. UAE authorities plan to begin linking fuel prices to global prices starting Aug. 1.
Kamran Jebreili/AP/File
Global oil prices have remained fairly low for most of this year, which should be good news for people in most of the industrialized world.
But that's not the case in the oil-rich United Arab Emirates.
The continued slump in prices has prodded the seven-state federation to make a somewhat radical change in policy.
U.A.E. officials plan to scrap subsidized price controls on gasoline, and bring prices in line with international rates, says the Associated Press (via U.S. News & World Report).
The move by the country's Energy Ministry was viewed as a surprise, and comes as the second-largest Arab economy continues to be affected by low oil prices.
Officials plan to begin linking local fuel prices to global prices beginning August 1.
Prices are currently set by the government at subsidized rates. Right now the average price of gasoline in the U.A.E. is equivalent to about $1.78 per gallon.
That's still much higher than average prices in other Arab countries, though.
Gas is priced at roughly 60 cents per gallon in neighboring Saudi Arabia, the report says.
A government committee will still meet once a month to set prices for the following month, but using international prices as a guide.
Energy Minister Suhail al-Mazroui said the change in policy could help lower fuel consumption and encourage more people to use public transportation.
The oil-rich country hasn't been a particularly strong advocate of decreased fuel use in the past--although it has found ways to profit off that impulse.
Abu Dhabi National Energy Co.--75 percent owned by the government of the U.A.E. capital--once had a seven-percent stake in Tesla Motors, which it sold in 2012 and made $113 million.
It will be interesting to see if the national government reverses its subsidy policy when international oil prices increase again.
EDITOR'S NOTE: Green Car Reports thanks our tipster, who prefers to remain an International Man of Mystery.