Impact of Domestic Fuel Price Reforms on the use of Public Transport in Saudi Arabia

摘要: Policymakers in Saudi Arabia recently imposed energy price reforms, which increased lowand high-grade gasoline, diesel and jet fuel prices by 67, 50, 79 and 12 percent, respectively. These fuel prices are expected to increase further in the near future, reducing the energy subsidies in the transport sector. The global prices of these fuels are greatly influenced by crude prices. In 2013, the average crude price was much higher than it is currently. Hence, the gap between the administered and market gasoline prices was around 346 percent, while today this difference is a mere 15 percent as a result of low crude prices (Figure 1).Therefore, current low crude prices offer policymakers in Saudi Arabia the opportunity to deregulate transport fuel prices without significantly increasing them–ie an increase in gasoline price of $0.03 per liter. Ultimately, fuel prices would increase as crude prices rise; however, in the long-run consumers’ income (Oxford Economics 2016) would also increase as would the diversification of the