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Petrol and diesel prices increased

A Staff Reporter
Filed on August 31, 2005

DUBAI — The prices of petrol and diesel have been hiked and beginning tomorrow, motorists will have to pay an extra Dh1.50 per gallon for petrol and Dh1.40 per gallon for diesel. The decision for an across-the-board hike in fuel prices at all service stations in the country was taken yesterday to ‘stem the losses of millions of dirhams per month at the pumps,’ said a statement issued by Enoc.

This is the second time that petrol prices have been hiked. Like the first time, this time too it has been fuelled by the rocketing price of oil that touched $70 per barrel yesterday showing little signs of easing off. Last year, the crude oil price was around $34 per barrel and by August of this year, it had almost more than doubled. According to Enoc, this means, that at today’s oil prices, “the loss per gallon is over Dh4.10 for petrol at the pumps.”

The business of the petrol distributing companies, says Enoc, have been suffering high financial losses for years from fuel sales. “The losses are now colossal as global prices have shot up to unprecedented levels,” it said in a statement, adding that it was with great regret that it had been forced to take this decision knowing it will be a burden on the motoring public.

The Price of Mogas 95 and Mogas 98 will also rise to Dh6.25 and Dh6.75 per gallon respectively from Dh 4.75 and Dh5.25. Pump price of diesel will be increased to Dh7.70 from Dh6.30 a gallon.

It’s not just the motorists who will have to bear the brunt. The petrol price-hike is bound to have a knock-on effect and an almost immediate impact on the general price level in the country. The news from out of the blue caught motorists by surprise and the reactions, when told, came in thick and fast with residents worried on the multiplier effect it would have on consumer products and motorists showing their displeasure with many thinking of starting car pools.

A chain reaction to the petrol hike is inevitable with almost every industry being hit. The overall cost of production of manufactured goods, consumer goods and construction material is very likely to go up and this could dull competitiveness and reduce margins of service sector industries.

According to one investment analyst, the sudden increase in the cost of production will squeeze the margins of most firms although some of the impact will be passed on to the consumer already burdened with the rising cost of living.





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