Fuel prices in the UAE: Your questions answered
With petrol prices on the up in UAE, how can we make sure our gas-dollars go that little bit further? Our friends at Good magazine have the answers.
What has made the price of petrol suddenly start changing? For years the price of petrol in the UAE has been subsidised by the government. This has shielded consumers in the country from global fluctuations in the cost of petrol, which are mostly influenced by the price of oil. These subsidies have been removed and, as of August 1, UAE consumers now pay rates based on average global prices.
95 OCTANE PRICES
Dhs2.14 a litre
Dhs1.96 a litre
Dhs1.79 a litre
Does this mean the price of petrol and diesel will go up and down? Yes. In fact when the changes came into force the price of diesel came down 29 percent to be Dhs2.05. Petrol the other hand went up between 23-24 percent, depending on the grade, or octane rating. However, prices in the market haven’t been completely deregulated, so petrol stations can’t just charge whatever they like. The prices for all kinds of petrol and diesel, for all of the UAE, are being set by the newly-formed Fuel Price Committee. The committee is tasked with monitoring the global prices of petrol and diesel and are expected to announce each month’s new prices on the 28th.
How will I know what the price is? You’ll see these announcements in the media, we’ll always cover it on WhatsOn.ae, but the prices will also be displayed on the pumps when you fill up. There’s also a price ‘knowledge centre’ on the Ministry of Energy website, which clearly outlines the prices that can be charged.
Are we paying more for fuel than people in other countries? Yes and no. Residents of the UAE pay the highest fuel prices among GCC countries – our neighbours in Saudi Arabia pay the least – but by global standards fuel is still pretty cheap. In other countries there are often a series of taxes levied on fuel costs to cover anything from road improvements to environmental programmes and these taxes frequently far exceed the base price of the fuel. According to the ranking at globalpetrolprices.com the UAE is 17th on the world’s list of cheapest petrol. People in Hong Kong and Norway – which has substantial oil reserves of its own – pay the most.
Why has this change happened? Well, for one, it will save the UAE a lot of money. The International Monetary Fund has estimated that it could save the UAE $500m in just the rest of 2015, with these savings likely to rise in the years ahead. Removing expensive subsidies also makes the country look good to investors and creditors, who might put money into businesses or extend loans to fund growth. But there’s another important factor too, one where consumers can really make a difference. Subsidised fuel prices tend to encourage wasteful consumption (who cares how much petrol you use when it costs so little?) and contribute to excessive emissions, as people happily drive around in vehicles bigger than they really need. It’s clear the changes in pricing are also intended to encourage what’s been called ‘rationalised’ consumption, as it is hoped consumers will gradually make a change to smaller vehicles and opt to use public transport more often. This all fits with broader government strategies aimed at making the UAE a ‘greener’ country, such as introducing solar power and developing green building regulations.
Will the prices changes make my car unaffordable? Everyone’s circumstances are different, but overall fuel costs are only a portion of the regular running costs of a typical vehicle. While it is the item you pay for most often, regular services, tyres and other consumable parts, plus annual insurance and registration all contribute to the overall cost. Add in the cost of depreciation – the amount a vehicle’s value drops as it gets older – and you’ll soon see fuel in a new light. When you are doing the maths on which vehicle is best for you, you should factor in all of these costs along with expected fuel usage.
Should I buy an electric car instead? No. Not this year, anyway. While electric cars have been catching on around the globe there are two key factors that constrain their usefulness: range and recharge time. Range is the distance an electric car can travel on one full charge of its batteries. For a top global seller like Nissan’s Leaf the claimed top range is about 135km, that’s a touch over the distance between Dubai and Abu Dhabi’s airports. In Middle East cities, where much of the driving covers long distances on fast-moving highways, you may find yourself needing a regular recharge. The thing is the infrastructure for that is not really in place yet, although it is on the way. In Dubai DEWA started installing car-charging points earlier this year and hopes to have 100 up and running by the year’s end. The authority is also walking the talk as it trials eight Renault ZOEs, a small all-electric car, as part of its fleet.
In that case, should I buy a hybrid car? Maybe. Hybrid cars are a clever compromise between electric and petrol vehicles, where power from an electric engine drives the car at low inner-city speeds and then gets a boost from a second conventional petrol engine when out on the highway. This tackles the recharging and range problem faced by electric vehicles, while still taking advantage of lower fuel consumption and reduced CO2 emissions. Clever computing on successful hybrids, such as Toyota’s Prius, means the car decides what drive methods are best for your driving conditions and uses the most efficient combination it can. However, while hybrids save fuel, their main advantage is reducing emissions when stopped in traffic, or moving slowly, which is when their electric engines do most of the work. The Prius has long been the benchmark for hybrid cars and the manufacturer has recently added the technology to a model of its popular small car, the Yaris. At the other end of the performance spectrum both the BMW i8 and McLaren P1 have incorporated hybrid elements into their powertrains, showing that these new technologies aren’t just for the shopping karts – supercars can be green too.
Should I try a smaller petrol car? Probably. Years of cheap petrol have fuelled the region’s love of big-engine fast cars and powerful 4x4s. In this new era of market pricing for fuel it may be worth a look at just how little petrol some of the modern and more modestly sized vehicles use. If you are used to driving a six-litre V8 then you could be getting through as much as 20 litres of gas for every 100km, depending on how you drive. A small modern 1.8-litre four cylinder could easily use half as much fuel over the same distance and driving conditions. Manufacturers all publish fuel consumption information for their vehicles, which can be used as a guide, but for real-world information try a tracking site like fuely.com where users record and compare their fuel consumption for specific models in day-to-day driving.
Will maintaining my car make a difference to fuel consumption? Yes, a huge amount. Regular servicing is intended to keep your car in top mechanical condition, making sure crucial filters – there’s usually one for fuel, oil and air – and other consumables are replaced and working properly. A well-fettled vehicle will always perform better than one driven into the ground by an uncaring owner.
What’s the number one way I can save fuel today, without spending a fil? Check your tyre pressure. Tyres can gradually deflate over time and incorrect tyre pressure can increase the amount of work your car’s engine needs to do to push the vehicle forward. The tyres for your car will have specific inflation requirements, which you’ll find in the vehicle’s handbook, or on a sticker in the driver’s doorframe. Inflating your tyres to the right pressure the next time you fill up is a quick, easy and free way to save fuel. Go on, get your hands dirty.
What else can I do? Get rid of all that stuff. Whether it’s a spare stroller, that thing you borrowed from your friend ages ago, or a set of golf clubs that haven’t touched grass in months, it is all adding weight to your vehicle. Every kilo counts when it comes to fuel economy, so lighten the load and stop using your car as a mobile storage unit. Since drag is the enemy too, avoid carrying things on your roof or invest in an aerodynamic case to strap items into.
Any other ideas? Take it easy. Despite the guy behind you honking the second the signal turns green, there’s no obligation to get off the line faster than an F1 world champion. Moderate acceleration and reduced top speeds will save tankfuls of gas if you can change your driving habits. Most current vehicle models come with cruise control; setting this for highway driving will stop you accelerating and braking unnecessarily at high speeds, which is very wasteful and annoying to anyone behind you.
Benjamin de Terssac, founder of ride sharing platform Carpool Arabia, explains how sharing your car might be the answer to cutting your fuel bill
Why do people use ride-sharing? The main reason people carpool is to save money. Drivers can off-set the cost of the ride and passengers can reduce their transportation cost; it’s more convenient than buses and cheaper than taxis, so it’s a win-win for everybody. When you get a 24 percent increase in the petrol price, people realise they need to make savings. I can’t avoid toll gates or parking, but I can reduce the amount of gas I pay for by taking other passengers.
Dubai has rules for ride sharing. What do people need to be aware of? Carpooling is legal but regulated, so you cannot do whatever you want. If you are sharing a ride with a colleague, a friend or a family member then you are good to go. If you are riding with strangers then you must register with the RTA’s Sharekni.ae carpooling service. People join a community at Carpool Arabia but we invite all the people to also create their accounts on Sharekni in order to get their carpooling permit. The rules say you cannot make a profit from ride sharing, you can just off-set the cost of the trip.
Have you seen boost in the number of people asking for ride shares since the rise? We can already see that compared to normal days the number of people offering rides on carpoolarabia.com has increased 30 to 50 percent daily since the fuel price increase was announced. It’s a combination of two things: the announcement of the fuel increase and the launch last month ago of the RTA’s Sharekni mobile app.
What do you think will be the next move to encourage ride sharing? I think the next big thing will be to dedicate a high occupancy vehicle lane for taxis, carpooling and small buses. Preferred parking spaces are also a good incentive for people to carpool.
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