Fuel and electricity pricing and subsidies in the GCC states: recent developments.

This paper discusses recent developments for fossil fuel (FF) and electricity pricing and consumption in the six Gulf Cooperation Council (GCC) states, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE), which together form the core of OPEC. These countries still subsidize FFs, albeit to varying degrees and UAE least so. The states have indicated a wish to reform their FF subsidies, which has led to a fiscal drain and lower than desired FF export revenues. Apart from UAE, none of these countries’ plans have however yet come to fruition. We discuss in some detail the political basis for such plans, and the factors making them more or less likely to be pursued and succeed. Long-term considerations, and pressures from budget balance, climate change and efficient economic allocation, all speak in favor of price reforms which will be overall beneficial to all the states. More modernistic views, taking over the countries’ political agendas, also push in the same direction. The paper also discusses similar recent developments in two comparator MENA countries, Iran (structurally most similar to the GCC countries), and Egypt (which has a more different economy and export base). [ABSTRACT FROM AUTHOR]