Not all doom and gloom

Does it matter that diesel is going up? Well, of course it does. In Dubai the cost of heavy oil has shot up by two thirds in less than a year.

Obviously, this is going to have an effect on the construction industry as a whole... and on the PMV sector in particular.

It is often said that the cost of diesel adds about five per cent to the cost of a project, though it is unlikely that the most recent hike can be passed on directly to the client. In fact, this burden will generally be shouldered by the contractor, meaning reduced margins and greater cost per tonne.

To add to the woes, it looks like the price can only increase further still, particularly if a switch to low-sulphur fuel is on the cards.

However, this gloomy picture does have one upside. For the first time in the region, fuel efficiency is being considered as criteria when buying new machinery. Tyres for road trucks that offer fuel savings are being snapped up, and there is increasing interest in ultra-efficient plant, such as the new diesel-electric PC200-8 from Komatsu.

Time will tell how much the diesel price will affect our industry, but one thing is clear; High fuel costs are here to stay, even in the region that produces it. The challenge is, how are we, as an industry, going to react?

Greg Whitaker is the editor of PMV Middle East.

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