Oman: Fuel price revision prompts changes in consumer behaviour

Published March 8th, 2016 - 07:30 GMT
Production levels at refineries and petroleum plants producing automobile fuels in Oman dropped by 11.6 per cent in 2015. (File photo)
Production levels at refineries and petroleum plants producing automobile fuels in Oman dropped by 11.6 per cent in 2015. (File photo)

Oman has witnessed a significant increase in demand for normal grade petrol (M90) after the government revised fuel prices in January.

Many consumers prefer to fill their vehicles with M90 instead of super grade petrol (M95) given the price difference.

For March, the price of super grade petrol (M95) has been set at 0.145 riyals per litre, that of regular petrol (M90) at 0.130 riyals per litre, while diesel will cost 0.146 riyals, according to the Ministry of Oil and Gas. The prices are reviewed every month.

Recent data showed that the output at refineries producing M90 increased by 74.3 per cent in January, reaching 389,700 barrels, compared to 223,500 barrels during the same period last year.

In comparison, production of the M95 variant declined 17.5 per cent to 1.4 million barrels last January as against 1.7 million barrels for the same period last year.

Ahmad Al Rahbi, an employee in the public sector, told Gulf News that he has been opting for the regular grade fuel ever since fuel prices were revised. “My vehicle doesn’t face any problems with the regular fuel and I also save some money instead of filling it with the super grade fuel,” he said.

Nasser Al Yahmadi, another public sector employee, said that his budget doesn’t allow him to use M95 for his vehicle. “I can’t afford to pay more, so I use regular fuel for my vehicle,” he said.

In contrast, Juma Al Hassani, an engineer, told Gulf News that he still uses super grade fuel for his vehicle as M90 is not suitable for his vehicle. “I tried once to put regular fuel but my car faced some technical issues,” he said.

Meanwhile a daily newspaper reported that the regular fuel (M90) would be upgraded to M91 to make it suitable for the largest number of vehicles.

Observers have said that the revision in fuel prices in Oman has begun to reflect on individual consumption trends.

Ahmad Al Maskari, an economic expert, told Gulf News that many workers in both the public and private sectors have started to carpool instead of commuting to work in indivudual vehicles.

Jalal Al Ghafri, who works for a commercial bank in Muscat, said that he and three friends use one vehicle to go to their workplace in Muscat.

“We do [carpooling] in turn for the whole week, even when we go to our home in Rustaq province on the weekend,” said Al Gahfri.

In January, the National Centre for Statistics and Information data indicated that the production levels at refineries and petroleum plants producing automobile fuels in Oman dropped by 11.6 per cent, compared to December of 2015. Overall, the output of refineries and petroleum industries fell by 12.9 per cent to 6.07 million barrels last January compared to the same month in 2015, which recorded production of 6.9 million barrels.

Diesel production also saw a decline by 8.3 per cent last January, reaching 1.6 million barrels compared to 1.7 million for the same month last year.

Subsidies on petroleum products, including petrol and diesel, are estimated to have cost Oman 900 million riyals (Dh8.56 billion) in 2015, compared to 840 million riyals in 2014. The new budget projects 3.3 billion Omani riyals (Dh31.47 billion) in deficit spending for 2016, which the government says it will try to reduce by improving the non-oil revenues and cutting expenditure. Oman posted a budget deficit of 4.5 billion riyals in 2015, as revenues declined by more than 50 per cent.

By Fahad Al Mukrashi

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