The recent move by the United Arab Emirates (UAE) to deregulate fuel prices is expected to save the government AED 9.1 billion (USD 2.4 billion) this year, Gulf News reported.
According to a report by the International Monetary Fund (IMF) issued in July, the UAE, the second largest Arab economy and the world’s seventh largest oil producer, spent half of a percent of its gross domestic product (GDP) on petroleum product subsidies in 2014, which is projected to decline to 0.2% of GDP in 2015. The UAE implemented fuel deregulation in August this year.
Fuel deregulation has ensured the country’s economic competitiveness, according to UAE Energy Minister Suhail Al Mazroui.
“The idea behind deregulating prices in the UAE was never aimed at saving money just for the sake of savings. Most of this money will be pumped back into the economy in the form of investments on infrastructure, health, education and other parts of the economy,” he said.
UAE has a population of approximately 9 million people (2013), according to the World Bank. However, there are about three million cars in the UAE, 23% of which are owned by Emiratis, which means that every citizen has two or three cars. Of the three million cars, 638,000 are four-wheel drive vehicles, 45% of which are owned by Emiratis. “It has become almost a cultural norm to own a 4×4 car,” said Al Mazroui. “We’re not asking people to change their cars, but people need to start asking themselves whether they need an eight-cylinder car before buying one and whether their car offers good mileage per litre of fuel,” he said.