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Higher bills? It’s your call.

Alex Malouf

As consumers and businesses, we can either take the lead ourselves and reduce our energy consumption patterns or we can continue to leave the lights on and lower the temperature setting on our air conditioning.

January 14, 2013 11:16 by



The Gulf has oil, lots of it. And don’t forget the gas. Everywhere you go you’re going to be reminded of the region’s hydrocarbon wealth. Let’s face it, with petrol prices as low as they are do we really have a problem with a little excess consumption.

Well, actually there is one issue. And it’s a serious concern for all of us. Let me ask you, how much oil and gas is burnt for electricity generation in Saudi alone? Take a guess. Daily, approximately fifteen percent of the oil pumped out of the ground is used in Saudi’s power plants. That’s over a million barrels a day. And then there’s the environmental impact. Kuwait, Qatar and the United Arab Emirates are among the world’s biggest carbon emitters per capita.

If you factor in a steady increase in demand for electricity of around eight percent per year until 2020 then it’s simple to see that there’s a problem. It’s almost a catch 22 situation, in that the region needs the energy on tap to fuel the commercial and industrial growth as well as more construction for residential housing. However, as the percentage of oil and gas that is diverted to utilities increases governments will subsequently realize a significant drop in state revenues.

The Gulf’s residents and businesses enjoy some of the lowest electricity rates in the world, thanks to generous government subsidies. Bahrain’s residential tariff is the lowest in the Gulf, and homeowners will pay at least a third to a half less for their power bills compared to consumers in the United Kingdom or Europe. For many of us, the price of our electricity is so low that we hardly think about the wider cost of the region’s energy model.

The trouble is that electricity waste is a problem for all of us. Low energy prices, summer weather in excess of 40 degrees centigrade and little in the way of effective energy conservation measures has resulted in levels of electricity usage that are unsustainable. Saudi Arabia and Kuwait have suffered energy outages in the summer as their transmission and distribution networks become overloaded. As a result, the Gulf has embarked on a multi-billion dollar project (worth more than one hundred and twenty billion dollars according to some estimates) to build more power stations and substations.

There’s two ways to make electricity customers rationalize their energy usage. The first is to use the stick and raise prices. Would this be popular? No, but the present situation whereby the region’s governments lose billions of dollars to subsidize electricity production is simply unsustainable.

The alternative is for us all to make an effort to reduce our electricity consumption both at home and at work. This can either be done on a corporate level, through the adoption of new technologies such as smart building systems to reduce energy wastage or, as is more likely, by the actions of individuals who do realize that we’re consuming more than we need. Simply changing an incandescent light bulb with a compact fluorescent lamp would be enough to reduce lighting costs by up to eighty percent.

The Gulf’s utility providers are aware of the need to reduce per capita consumption and Dubai Electricity and Water Authority, Bahrain’s Electricity and Water Authority and the Saudi Electricity Company have implemented educational awareness campaigns to drive home the message that we as consumers need to better manage our electricity usage. But they cannot force us to change our ways. Either we begin to behave differently and start to think about how we can save rather than waste energy, or we’re going to be hit by electricity price rises.

The issue of the Gulf’s electricity subsidies isn’t new, but governments have been loathe to raise prices for reasons of domestic politics. Sooner or later, subsidies will have to be reduced. As consumers and businesses, we can either take the lead ourselves and reduce our energy consumption patterns or we can continue to leave the lights on and lower the temperature setting on our air conditioning.

What we waste today we will end up paying more for tomorrow in more ways than one. The greater our per capita usage of electricity, the more that the GCC’s governments have to burn off from the existing oil and gas reserves. If we continue to demand more power both at home and at work oil exports will be threatened. One study by researchers at Chatham House has predicted that Saudi Arabia may not be able to export oil by 2038 if the status quo remains. The question may not even be do you want higher energy bills anymore. Put another way, do you want the region’s growth to be sustained? If the answer is yes, then please do show your support by throwing out that incandescent bulb and turning off the light as you leave.

 

A British national with Arabic roots, Alex has spent ten years in the Gulf and has lived in Saudi Arabia, Bahrain, Lebanon, Jordan, Syria and the United Arab Emirates. Alex lost his heart to journalism years ago but he has worked with a range of multinational companies in the technology, energy and financial sector to develop their marketing and communications approach to the region. He’s currently based in Dubai but can often be found at Dubai International Airport flying back home to Bahrain or some other (hopefully exotic) destination.



1 Comment

  1. chaz on January 16, 2013 5:53 am

    agree with the premise that subsidy is unstainable, but that is not the complete story.
    It is not subsidised for the majority i.e. expats.
    Until that is faced head on, the debate is one-sided and sustainability will not be addressed.

     

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