GCC states must re-assess fuel subsidies, road tolls, car taxes to make new metro, rail systems work, argues Beatrice Thomas
Public transport authorities the world over rely on two main things to get people off the road and onto a train or bus – the cost of fuel and the efficiency of one mode of travel over another.
Norway, for example, applies this rule in spades by ramping up the price of fuel to a world-high $10.08/gallon despite being the largest oil producer and exporter in Western Europe.
Instead of selling oil cheaply to the local population, as GCC countries do through heavy subsidies, it exports most of its oil to the EU while simultaneously importing from Russia, Europe’s second-biggest oil exporter, for its own needs.
Aside from the obvious profit gains for Norwegian oil companies from this arrangement, the Norwegian Government also knows that cheap petrol encourages more cars on the road, which means more pollution to no economic benefit.
It’s also why cars are so heavily taxed in Norway – drivers pay both a road tax and a CO2 emissions tax.
However, the opposite can be said for the Middle East, which will need to learn from places like Europe if it wants to make existing and future public transport systems a success.
A snapshot of on-road costs in a new Cost of Livings Reports GCC comparison shows fuel at 13cents per litre in Saudi Arabia and 46 cents per litre in the UAE.
In addition, cars themselves are relatively inexpensive to run with a small SUV costing about $119 a year to register.
Travelling by taxi is also a bargain at $4.32 per 10km journey in the Emirates compared to, say, Frankfurt or Belgium, where the same journey will cost about $24.
While it’s great for residents, absolutely, it’s no incentive to swap a car for a bus or train, which GCC countries are trying to get people to do. Whether it be Dubai’s existing metro system and soon-to-be-launched tram network or the under-construction metros in Riyadh and Doha, the push is on for greater public transport use.
But somewhere down the line a tough call needs to be made to determine how successful these systems will be.
Dubai introduced a road toll on Sheikh Zayed Road in 2007 in a classic anti-congestion measure, while Kuwait and Bahrain are reconsidering fuel subsidies.
Whether other GCC countries follow a similar path remains to be seen, but the status quo is unlikely to see much change in travel habits unless something is done to entice residents off the roads.