Starting Aug. 1, drivers in the United Arab Emirates could face higher prices at the pump.
The Energy Ministry announced that fuel prices would no longer be subsidized – choosing to use the word "deregulate" – starting next month to lower fuel consumption, protect the environment, preserve national resources and support the national economy.
"The decision to deregulate fuel prices has been taken based on in-depth studies that fully demonstrate its long term economic, social and environmental impact. The resolution is in line with the strategic vision of the UAE government in diversifying sources of income, strengthening the economy and increasing its competitiveness in addition to building a strong economy that is not dependent on government subsidies," Energy Minister Suhail Al Mazroui said in a press release.
Mazroui went on to explain that the decision would encourage consumers to use less fuel while also encouraging the use of public transportation. With less consumption and more residents turning to public transportation, the UAE envisions it will preserve vital natural resources and also help to protect the environment.
Although drivers in the UAE may be unhappy with the move, the country currently has some of the lowest fuel prices in the world due to state subsidies. Of course, removing these subsidies will free up money in the national budget for other investments.
Although fuel prices will likely increase, the minister said it was believed diesel prices would actually go down.
"Considering the international prices of oil and petroleum derivatives, we expect diesel prices to go down. This will stimulate the economy as lower diesel price would mean lower operating costs for a wide number of vital sectors like industry, shipping and cargo among many others," Mazroui said.
The minister went on to add that the decision will improve the UAE’s investment environment, enhance its economic competitiveness and support the policy of a free-market economy with no direct interference from the government. According to Mazroui, the move will help to make the UAE a more attractive option to foreign investors.
Even though prices may increase, the ministry gave its assurance that they would be in line with international standards. A committee will be responsible for announcing the prices for each month on the 28th. August's deregulated prices will thus be announced on July 28.