UAE Puts An End To Gas Subsidies

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Originally published on Kompulsa.

The United Arab Emirates’ Energy Ministry has decided to terminate gasoline subsidies, as the country’s economy is being negatively affected by low oil prices. Oil prices will most likely go right back up anyway, but it is uncertain when that will happen.

PRT station, Masdar City
PRT station in Masdar City.
Image credit: Masdar.

The average cost of gasoline in the UAE is equivalent to $1.78/gallon and the policy change should increase the cost closer to global prices. The policy change is also very likely to reduce waste. Oil subsidies have no place in a warming world that is struggling to cut back on oil usage, so I feel that the UAE government made the right decision.

Energy Minister Suhail al-Mazroui said that the policy change could spur the use of public transportation and reduce fuel usage. To add to that, the boost to the public transit industry will benefit their economy in the long run, and if the public transportation industry is sustained, it will help cushion the financial blow that everyone experiences during oil price spikes by offering an alternative to personal cars (which often use more fuel than public transportation).

Masdar City Festival (Walking The City)
Masdar City by Zachary Shahan | CleanTechnica (CC BY-SA 4.0)

Subsidies serve the purpose of stimulating the sales of certain items, of course, and the opposite is needed for gasoline sales (from an environmental standpoint). Where the economy is concerned, the United Arab Emirates has been building up its infrastructure, which will help the country to foster growth in various areas and aid the transition to a post-oil economy.

The wealth the country has amassed from its massive oil supply has helped it to develop the country almost into a utopia (according to some, at least). The UAE now has a robust, solid, and technologically advanced economy that is reducing its reliance on oil. It is very admirable to see a country that benefits so much from fossil fuels lead the way to a fossil-fuel free future, and even more so than many other countries using said wealth. One project which reflects that is Masdar City. Masdar City is a minimum-waste, solar + wind-powered city which minimizes overall resource usage.

Related: What Is Masdar?

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Nicholas Brown

Has a keen interest in physics-intensive topics such as electricity generation, refrigeration and air conditioning technology, energy storage, and geography. His website is:

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17 thoughts on “UAE Puts An End To Gas Subsidies

  • So when will other places follow that example?
    Like Canada where I live, oh I forgot we have Mr. Harper. :((
    Does anybody know if there is a comparison someplace between places that embraced RE energy, energy efficiency and the ones that still all for FF and hoe the economies differ?

  • So they’re finally following Norway’s footsteps. Good for them! Really love that they have a PRT system!

    • It’s been there for a long time but was hugely expensive and there are no plans to expand it. Fun, though. 😀 I’ve ridden in it a few times.

      • Fun, but ridiculous: PRT combines the construction expense of a train system with none of the economies of scale of a train system.

        (The advantage of a train is that you can fit hundreds and hundreds of people *comfortably* in one train and then run it at high speeds, which you can’t do with anything else except an airplane. And you can load all those people in parallel through dozens of doors, which you can’t do with an airplane.)

        • Surely PRT would be an alternative-for getting to the station.

    • Awesome! Seems China has woken up to the fact that not charging for what goes up the smokestack doesn’t magically make it free.

      • China could build a steel mill or 2 in AUS.

        AUS exports coking coal, and iron ore.

        It would be less polluting to turn it into steel here and export the steel.

        • True, as far as I remember the numbers from 10 t of hard coal only 1 t of coke is made. In China – and then this coke partly exported.

          But then: who takes Australian coke, the price would be too high I’d say.

        • Does Australia have its own iron ore? You’d have to ship the iron the other way, and iron is *heavy*. I’d expect it would be most efficient to manufacture the coke in Australia and then ship it to the iron-mining regions?

          • AUS exports iron ore.

      • The unaccounted for external costs in burning coal have been recognized in China. It will take a few more years for the USA and AUS to recognize them.

        • I think they recognized them as well, accepting them is another matter 😉

  • I almost read that as USA. That would be a shock.

  • The IMF have been pushing the current dip in oil prices as a window of opportunity for ending oil subsidies painlessly. They are not getting many takers, but this news is a good sign. Will the Saudis follow?

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