Government sources said the Cabinet’s subsidies committee does not have on its agenda any recommendation to raise prices of petrol. It added it also has no plans to consider recommendations by international ratings agencies to raise gasoline prices as part of financial reforms to remedy Kuwait’s budget.
Sources said the subsidies committee is supervised by finance ministry and submits recommendations to increase or decrease subsidies in order to maintain prices and prevent hurting consumers and Kuwaitis’ housing needs to build up their allocated plots. Sources said KNPC has affirmed it is able to supply enough fuel to the market at current prices with no affect on its work and the available budget, so there is no need to increase fuel prices, at least in the near future.
But among Gulf states, petrol prices remain the cheapest in Kuwait. Mere years ago, fuel was cheaper than bottled water in the oil-rich United Arab Emirates. Now, long lines snake outside gas stations on the eve of price hikes each month. Fuel prices in the major OPEC producer, set in line with global oil price benchmarks, have soared over 70 percent since Russia’s invasion of Ukraine, accentuating differences with neighboring petrostates that heavily subsidize gasoline.
At about $1.23 a liter after July’s price rise, the unprecedented fuel cost in the UAE remains below the grim records reached in the United States and Britain as the war in Ukraine unleashes the biggest commodity shock in decades. But the region’s citizens have long considered cheap fuel a birthright. In Kuwait’s lavish welfare state, the cost per liter is nearly four times less.
As pressure mounted last week, the UAE and Saudi Arabia allotted a combined $13 billion in social spending for low-income citizens – an option clearly unavailable to the region’s less affluent economies such as Egypt and Lebanon, where the price of bread is surging and hunger is spreading. Still in the UAE, where expats outnumber locals nearly nine to one, fuel price hikes are costliest for legions of workers from Africa, the Middle East and South Asia who power the economy.
Inflation has cut into laborers’ already meager salaries. Other Gulf Arab countries have also curbed state benefits to balance their budgets in recent years. But fearing backlash from angry consumers, none have gone as far as the UAE, where fuel prices are nearly double the average among Gulf Arab states.
The country can get away with this partly because the burden falls on its 9 million expat residents, experts say. Meanwhile, in Saudi Arabia – a country of 35 million, two-thirds of which are citizens – the government’s fuel price cap has kept inflation under control even as food costs have spiked. The tiny Emirati population benefits from a generous welfare state that helps with everything: Free education, health care and housing, grants for marriage, scholarships to foreign universities and well-paid government jobs.
That contract emerged across the region as states cashed in from the oil boom and distributed some of the bounties to citizens. Last week, UAE President Sheikh Mohammed bin Zayed Al-Nahyan unveiled plans to double the state’s social support for low-income Emirati families – classified as those who make less than $6,800 a month. The $7.6 billion packages will cover 85 percent of recent fuel price hikes and 75 percent of food inflation, among other things like housing allowances and support for job-seekers. The government portal received so many applications that it crashed.
In Saudi Arabia, the world’s second-biggest oil producer, King Salman announced $5.33 billion in direct cash transfers to citizens “to protect beneficiaries from the effects of global price rises”. But that help will not reach those who need it most. Desperation over the cost of living is growing among the region’s low-paid migrant workers.
Uber drivers and food delivery riders who pay for their own fuel in Dubai say they’re barely breaking even. Riders for two main delivery companies went on strike over their slim salaries in May – defying the UAE’s ban on labor protests. Uber said it would raise fares as much as 11 percent for some trips to account for new gas fees in Dubai, but some drivers say that’s inadequate. – Agencies
