Amid rising fuel costs, residents in the United Arab Emirates say they are finding alternative ways to commute, with many switching to electric cars to avoid paying soaring petrol prices.
Globally, petrol and diesel prices have hit their highest levels on record in recent months in many parts of the world, hitting motorists and adding to business costs, driven by a sharp rise in global oil prices
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The UAE shifted from a system of fixed, subsidized fuel prices to one of adjusting prices monthly in response to global trends in 2015 with officials saying at the time that prices would be “based on the average global prices with the addition of operating costs,” Reuters reported.
In the UAE, motorists are feeling the pinch.
Dubai-based British expatriate and sustainability expert Jonathan Howell-Jones told Al Arabiya English that rising fuel prices – diesel, Special and Super have risen above 4 dirhams per liter from June – are leading to more residents thinking about investing in electric vehicles to cut commuter costs.
A sustainable investment
“At the moment many people are considering switching over to electric cars, which are more expensive to buy but generally mean recharge costs of about AED25 to AED35 for a full charge that can take you about 400 kilometers,” Howell-Jones said.
“However, while we are seeing some cheaper models in the market such as the MG ZS EV due in January at about AED125,000, most brand-new electric vehicles are still considered quite expensive and there is no fully supportive second-hand electric vehicle market here.”
The British expat also said “it’s worth looking at hybrid models if you don’t want to go full electric just yet. A friend of mine bought a Toyota Prius to commute from Dubai to Abu Dhabi and his monthly fuel bill was cut from AED3,000 to AED800.”
Adil Ahmed, co-founder of Dubai-based Titanic Technical Services and long-term resident of the UAE, is one of the people making the switch to electric cars.
He said that the surging fuel prices impacted his business’ baseline by as much as 20 to 30 percent.
“I think the government is trying to do their best in maintaining prices for the common citizen,” the 22-year-old told Al Arabiya English.
Ahmed’s business, which specializes in providing technical services across sites in large parts of Sharjah and other northern emirates, requires frequent travel to the farther parts of the country from his residence in Dubai.
Combined with influence from a family friend and the rising costs, Ahmed and his family decided to purchase an electric vehicle – both as a business-conscious investment and for personal use, to recover the soaring costs of transportation.
The Tesla Model Y, an Elon Musk developed crossover, was the family’s electric car of choice. However, with global production delays owing to chip shortages and logistical blocks, the car is only due for delivery by October.
“If the Tesla is everything they say it is, in terms of range and comfort and ease of use, I may even consider making my [business] fleet fully electric,” he said, as he eagerly awaits the electric vehicle.
“The government is also offering so many advantages from owning an electric vehicle, including free RTA parking, free supercharging in a lot of malls, and DEWA charging stations frequently across the UAE. This is a major attraction for me as a business owner,” Ahmed said.
Fuel-efficiency
The Indian expat has switched to more fuel-efficient cars in his garage for immediate use. Despite the switch, he said he must shell out AED240 for a full tank every two to three days.
“I remember days when I paid 120 or maximum 130 dirhams for a full tank. I used to travel freely,” he said.
Another young entrepreneur and self-proclaimed auto enthusiast, Ashwin Ajit, finds the rising fuel price “concerning,” and hopes to find a permanent solution if the costs continue to soar.
Ajit is the CEO of a Dubai-based manufacturing company, Core and Coil Transformers, who said that the business expenses have seen some impact from the rising prices.
“Delivery of raw materials and supplying clients with the completed product are now more expensive,” said Ajit, whose firm is located on the outskirts of Dubai’s DIP and requires delivery across the UAE.
Early in August 2021, backed by a rising infrastructure support for electric vehicles in the UAE, Ajit convinced his family to invest in a Tesla Model 3.
The budget-option electric car from Tesla would replace the gas-guzzling Toyota FJ Cruiser family car.
“When I first started campaigning for an electric car in the family, no one supported me. But after a long period of convincing and taking test drives, we bought the Model 3,” Ashwin said.
He placed the order in September and received the car in November, just as the fuel prices were inching higher.
“Petrol was two dirham and fifty fils then,” he remarked, adding that by the time he received the car, it was nearly three dirhams.
“My family was skeptical on adopting an electric car early on, but now they thank me for taking the leap,” Ajit said as fuel prices currently stand at AED 4.03 for one liter of Special 95.
“I forgot the last time we fueled the FJ [Cruiser],” the 23-year-old Indian expat said.
He praised the country’s charging network and hopes to see more stations pop up as more people adopt electric vehicles.
“I was one of the first ones in my university to drive an electric car. Now, I can see eight to ten [electric] cars parked on campus on a normal day,” claimed Ajit.
However, the petrolhead in him said he is unable to enjoy the long, winding roads of the UAE with his high-octane fuel powered Toyota 86.
High octane fuel, or Super 98 as it is called in the UAE, is the more expensive type of petrol that is optimal for Ajit’s daily driver coupe.
“It was my first car and is still my go-to, but with the current prices, electric is my only option,” he said, hoping that the prices deflate in the coming months.
Petrol-saving habits
Howell-Jones said – for those who cannot afford to change cars – there are alternative suggestions.
“I would suggest, if you have a petrol-run car, make sure you apply some petrol saving tips – don’t speed everywhere.”
He also suggested using cruise control to moderate speed and get more for the mileage.
“Don’t always travel by car if you can help it and where possible, use sustainable public transport like the Dubai Metro,” Howell-Jones added.
Salman Hussain is an Indian expat who is the CEO of Fuse – a company that claims to be the first in the UAE to convert petrol-powered cars to run on battery.
He told Al Arabiya English that he has seen an increase in customers looking to save costs on fuel since oil prices skyrocketed.
Whereas in the past, customers would want to switch to electric because it was fashionable, more and more people are now looking for ways to cut costs.
“What people do usually [in the UAE] is switch because it’s a cool thing to do, it’s a nice thing to do,” he said.
“But increasingly so I’m getting a lot of inquiries now from b2b that want to switch over and they want to know how they can save on costs, because the costs are high.
“And certainly diesel costs here are more than petrol costs. So it hurts operators quite a bit.”
Dubai expat Saswati Vaidyanathan is one of those residents currently feeling the fuel price pinch. She said soaring petrol pump costs only exacerbate other rising costs, such as rents and food prices.
“With the recent hike we are all thinking about fuel and restricting long drives,” she told Al Arabiya English. “This adds to the cost of other commodities going up, daily essentials like, milk, yogurt. Since it's a small amount we don't see or get affected but when you add up yes, it is expensive.”
Monthly expenditures rising
Carol Glynn, a UAE-based finance coach and chartered accountant, told Al Arabiya English that teher has been a significant increase in her client's fuel costs.
“But it's not just because of the price of fuel. Many are going back to work in their employer's offices so it's increased due to increased driving over the past few months combined with the increase in cost per liter.
“Many will comment how they noticed how much more it costs them to fill their cars. It is causing financial stress.
“We have been very fortunate in the past to benefit from lower oil prices than residents of many of our home countries. It is even more notable now as both usage has increased due to restrictions lifting, going back to office-based working, socialising more etc and this is happening at the same time as the prices are increasing. So it can feel even more significant than it might have two years ago.”
Fellow Pramila Raj has also seen her monthly expenditures rise.
“The fuel cost is taking its toll,” she said. “Especially when your child is in a school in Mirdiff (and you are on the other side of the city). A full talk which was costing Dh11 in 2010 is now more than Dh300.
Ibrahim Abdulkhaliq, another expat, has also been affected.
“I think we are yet to see the real impact of this, so far it’s mainly impacting ‘direct’ fuel bills for transportation, but soon, and in my opinion very soon, the butterfly effect will start pushing all other industries including food, electricity cost, AC cost, schooling, construction… etc,” he said. “The concern here is, one day fuel prices will fall down again, hopefully, but most of the products impacted by this raise right now won't follow and will remain at the same upper limit, this should be the main concern in my opinion.”
Masuma Noorani, another expat in Dubai, said: “It's not just this month but the hike is huge since January this year. Me and friends would often drive off to explore mom N pop outlets in Sharjah or Ajman for novelties or a recommended food joint. Now driving off on a whim into the sunset is not going to be a frequent occurrence.”
Not all residents share same view
Despite the common theme, not all residents shared the same view.
Niccole Ayache, another expat in Dubai, said: “I personally don’t think it matters here as much as it does in other places. Dubai is relatively small, so unless you are doing long haul drives to other emirates it shouldn’t affect your budget too much.”
In 2015, the Ministry of Energy & Infrastructure and Ministry of Finance announced it would act as the government’s representatives in a committee set up to review fuel prices in the UAE every month.
During the 2020 pandemic, the UAE’s fuel price committee maintained a steady, comparatively lower per-liter price to support individuals and businesses that were affected by lockdowns and movement restrictions.
A 2016 Chatham House report on price reforms in the GCC said that state-controlled prices are “one way of protecting national living standards, sharing national hydrocarbon wealth and incentivizing industrial growth and investment.”
As Al Arabiya English reported earlier this month, expatriates in the United Arab Emirates are beginning to feel the pinch of the global cost-of-living crisis which is affecting rent, food and utility bills as well as fuel.
Additional reporting by Marco Ferrari
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