UAE hikes fuel prices by 30%

THE UAE became the first Gulf producer to hike the price of petrol since crude prices started soaring on world markets. Petrol prices at UAE service stations were raised by over 30% last week through the move.

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By  Rhys Jones Published  September 4, 2005

THE UAE became the first Gulf producer to hike the price of petrol since crude prices started soaring on world markets. Petrol prices at UAE service stations were raised by over 30% last week through the move. Gasoline prices at all service stations in the Emirates were increased by US$0.40 per gallon and diesel prices by US$0.38 per gallon, petroleum retailer Enoc said in a statement. The price of Mogas 95 and Mogas 98 has jumped to US$1.70 and US$1.83 per gallon respectively, from US$1.29 and US$1.42. The pump price of diesel has increased to US$2.09 from US$1.71 a gallon. The move is a reaction to the growing losses being suffered by the region’s fuel distribution companies and follows a minor increase introduced in April. UAE petroleum retailers have been suffering high financial losses for years from their fuel sales. Recently, however, losses have sky rocketed as global oil prices have shot up to unprecedented levels. In 2003, the price of crude was around US$34 per barrel but as it stands now the price of oil has almost doubled to over US$68 per barrel. “At today’s prices the loss per gallon is over US$1.1 for petrol at the pumps,” the Enoc statement said. The company added that it appreciates the increase will be a burden on UAE motorists, but that it was with great regret that the step had been taken. Late last year Dubai-based Enoc and its competitor Eppco threatened to shut their outlets unless prices were raised by 30%. Both companies cited heavy losses caused by record high oil prices at the time, though their threat to shut down did not materialise. The price rises, which came into effect last Thursday, were introduced despite the UAE being a major oil producer, pumping around 2.5 million barrels per day. Like fellow producers, the UAE (a member of the OPEC cartel), which relies on oil for some 80% of its revenue, has enjoyed a windfall from rising crude prices. Abu Dhabi, the wealthiest of the UAE’s seven emirates accounts for some 90% of output. One analyst said the rise was necessary because “the financial losses of distributors over past years, to the point where they could no longer sustain the losses given the unprecedented rise in oil prices” on the world market. Even with the increase, prices in the Emirates still compare favourably with other countries. The price of a gallon of petrol in the US has climbed to more than US$2.50.

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