Petrol prices may slide up to 60 percent in UAE
Hike in prices of oil derivates is a direct cause of high living cost for UAE residents
The Federal National Council debated on a report on price rise of oil derivates. It approved a recommendation calling the State to increase its subsidy to fuels. Such action is expected to bring petrol prices near the levels of those in the neighbouring Gulf countries.
As of now, the prices of petrol in UAE are third highest in the Arab world, while the country is the seventh largest oil producer worldwide.
A purposely formed committee studied the issue and found that the high prices of oil derivatives were attributed to the fact that some oil companies imported refined crude, because they have no refineries inside the country. The expensive processing of imported refined crude is definitely giving rise to prices of oil derivatives.
The committee noted that the government provided support to the four national oil distributors – ADNOC, ENOC, EPPCO and EMARAT – of AED 1.7 for benzine price as per the current prices in world oil markets.
The Committee also factored abrupt hike in diesel prices as happened on 13 March 2012 in emirates of Dubai, Sharjah, Ajman, Ajman, Ras Al Khaimah, Fujairah and Umm Al Qaiwain where prices went up 20 fils per litre.
The committee said vibrant economic activity, massive urban and construction explosion, and industrial expansion (8.5% a year to 4,960 factories) were also responsible for the marked increase of energy consumption.
Other key contributors included the rapid growth of population from 4.1 million people in 2005 to 8.2 million in 2011 and the rise in the number of registered vehicle in the UAE to 2.4 million in 2010, an increase of 10% over 2009.
The committee concluded that hike in prices of oil derivates is a direct cause of high living cost for both UAE nationals and non-nationals.