for Fuel Subsidies
The return of fuel subsidies in several emerging market countries may keep oil demand growth on track, muting the price effect on consumer behavior.
Similar to other Gulf producers, UAE and Qatar are making efforts toward the twin goals of reducing expensive fuel subsidy programs and diversifying exports through larger natural gas volumes.
Algeria's president has called for the country to combat the “hegemony of fuel” in light of recent economic devastation.
Low oil prices and soaring budget deficits have provided motivation for emerging markets to scrap the status quo with regards to fuel subsidies. Despite short-term pain from liberalizing prices, as seen currently in Mexico, longer-run benefits of curbing oil demand growth will emerge.
The UAE recently announced that it rolled out draft standards for fuel economy in order to reduce emissions. This action follows the emirate's Gulf neighbor Saudi Arabia, which implemented similar measures earlier this year.
Saudi Arabia's reforms are hugely important because the country's stability hinges on the robustness and reliability of the welfare state, which citizens hold as their birthright.