Over 22% of UAE car-owners may switch to public transport due to fuel price hike

Around 22 per cent of car owners in the United Arab Emirates plan to increase their usage of public transport as a result of a hike in fuel prices, a new survey by YouGov showed.

The UAE scrapped fuel subsidies from August 1 and will fix prices on a monthly basis depending on international crude prices. Following the move, the petrol prices rose 24 per cent while diesel prices fell 29 per cent.

According to the YouGov survey, 20 per cent of car owners surveyed said that they will shift closer to their places of work or public transport stations to reduce their transport bill. But the respondents also expressed concern that such a move might push up rents of properties close to public transport stations.

Meanwhile another 18 per cent said that they will resort to techniques such as carpooling, using shuttle buses or purchase a smaller fuel efficient car. About 49 per cent said that they will be careful and restrict the number of trips to places such as malls and parks to reduce their fuel bill.

For respondents who are not planning to change their travel habits, around 41 per cent of car owners polled said that they will reduce expenses in other areas to cover the higher fuel costs. This was particularly applicable to those respondents who earned $2,665 per month.

Nearly 17 per cent of those polled said that they will dip into their savings or use a credit card to cover the extra expenses.

A vast majority (65 per cent) of those surveyed by YouGov also said that the decision to deregulate fuel prices could make it harder for the UAE to attract and retain foreign talent.

But YouGov echoed the viewpoints of agencies such as Fitch and Strategy& that predicted just a moderate inflationary effect as a result of fuel price deregulation.

“Whilst consumer spending will come under stress in the short term, the decision looks to have a positive impact on the use of public transport rather than cars,” said YouGov’s consumer research director Wadii Eljourani.

Around 46 per cent of those polled also admitted that fuel deregulation could be beneficial for the country’s economic sustainability.

According to the International Monetary Fund, post-tax petroleum subsidies in the UAE would have cost the government $7bn in 2015 (1.9 per cent of gross domestic product) under the current system, a decline from $10.2bn in 2013 (2.5 per cent of GDP).