Energy Pricing Reforms in the Gulf: A trend but not (yet) a norm

The report analyzes energy pricing reforms in the MENA region, specifically within the GCC, following the 2014 oil price collapse. It argues that while price increases are a regional trend, they are not yet a norm and risk political instability if not accompanied by social safety nets and labor market reforms. The document details specific reform measures in countries like Saudi Arabia, Oman, and Morocco, and provides technical recommendations for international assistance to support a transition toward productive economies.

• The 2014 oil price collapse acted as a primary catalyst for energy pricing reforms in GCC exporting countries, as total revenues declined by an average of 10 per cent of GDP in one year.
• Energy pricing reforms in the GCC vary by country based on fiscal stress; Oman, Bahrain, and Saudi Arabia faced more immediate pressure to reform than the UAE, Qatar, and Kuwait.
• The report argues that energy pricing reform is not an isolated fiscal tool but part of a broader transition from an 'allocation state'—characterized by in-kind benefits and public employment—to a 'productive economy'.
• Saudi Arabia is identified as particularly vulnerable to inflationary effects and poverty traps due to its large population and unequal per capita income, necessitating targeted safety nets like the Citizen’s Account cash transfer program.
• GCC labor markets are characterized by a heavy reliance on public sector employment for nationals and expatriate labor for the private sector, which hinders the development of a productive domestic economy.
• In MENA fuel-importing countries, Morocco is cited as a leader in gradual reform, having eliminated fuel subsidies for gasoline, diesel, and industrial fuel by 2015, which reduced its deficit by 2 per cent of GDP.
• Egypt implemented large-scale subsidy reforms in July 2014 and August 2016, the latter being a condition for an IMF loan, with significant price increases for gasoline, diesel, and natural gas.
• Saudi Arabia's 2015 reforms included significant increases in transport fuel prices, with 95 octane increasing by 50 per cent to USD 0.24 per litre and diesel by 80 per cent to USD 0.12 per litre for transport.
• The report suggests that international technical assistance should avoid normative debates about the definition of 'fossil fuel subsidies' and instead focus on capacity building in social safety nets, communication campaigns, and statistical modeling.
• The success of pricing reforms is threatened by the risk that exporting states may reverse these measures if international oil prices structurally increase again.

APA

Moerenhout, T. (2018). Energy Pricing Reforms in the Gulf: A trend but not (yet) a norm. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/energy-pricing-gulf-trend-but-not-norm.pdf

Chicago

Moerenhout, Tom. Energy Pricing Reforms in the Gulf: A trend but not (yet) a norm. International Institute for Sustainable Development, 2018. https://www.iisd.org/system/files/publications/energy-pricing-gulf-trend-but-not-norm.pdf.

Wikipedia

{{cite report |last1=Moerenhout |first1=Tom |title=Energy Pricing Reforms in the Gulf: A trend but not (yet) a norm |publisher=International Institute for Sustainable Development |date=January 2018 |url=https://www.iisd.org/system/files/publications/energy-pricing-gulf-trend-but-not-norm.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{moerenhout2018energy, author = {Moerenhout, Tom}, title = {{Energy Pricing Reforms in the Gulf: A trend but not (yet) a norm}}, institution = {International Institute for Sustainable Development}, year = {2018}, month = jan, url = {https://www.iisd.org/system/files/publications/energy-pricing-gulf-trend-but-not-norm.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }