Deregulating UAE fuel prices, and how this will impact consumer behaviour

Starting from August 1, 2015, the UAE will be deregulating gasoline and diesel prices. Without the price being subsidized as it currently is, this initiative will result (at least for the short run) in car petrol prices to increase.

This move comes with a number of benefits and challenges. The advantage from an environmental perspective is that, in theory, residents will become more conscience about the number of trips they make, and will attempt to eliminate unnecessary ones which ultimately means an overall reduction in carbon monoxide emissions. Families may also become more encouraged to own less cars and be more encouraged to car pool with one another in order to save on the expected increase in costs. Car purchasing behaviour may also change in the sense that car buyers may start considering fuel efficiency as a factor at the time of purchase.

On the other hand, one of the challenges that will be faced with this policy will be on how ready the public transport system is to accommodate for commuters who would seriously consider using it as an alternative transportation mode. Though already advanced compared to the other emirates, Abu Dhabi and Dubai's local public transport system is still in the process of improving and expanding its network to become very efficient for its residents; but until those networks are completed, using them will remain efficient only to those who live within close proximity to the current network, and are heading to a place which is also near the network they are using.

Trans-emirates public transportation is still confined to taxis, and buses mainly; with the former implicating substantial charges, and the latter still consuming more time than driving your own car. Certainly, now and more than before, it would be a great move if works on a passenger rail network between the emirates is expedited, that once completed, is also connected to the local public transport systems such as the metro.

There is also the aspect of consumer behaviour. There will probably be those who will still prefer to pay more on fuel consumption rather than choosing to car pool, or using the public transport system in order to save on the costs. I fear also that those people will ignore fuel efficiency as a consideration factor when buying a car. All this to maintain social status in their perspective. 

Though surely one can continue arguing more benefits and challenges, the new policy adopted certainly is a sound one that reflects a strategy that would be implemented by developed economies. Fuel is a scarce resource, and its inefficient consumption will continue to adverse affects both the economy and the environment, we all know this. Money is also another limited resource, so rather than yielding to paying more, perhaps it is time for us to seriously consider becoming more conscience of our living expenses, and more responsible with our daily choices.

How will this policy affect you? Will you be considering using alternative transportation methods? IF so, which ones? Do you think people will switch to more fuel efficient cars? Please do share your feedback in the comments section.