Higher fuel prices hit savings

“Surging fuel prices have a major impact on the purchasing power of consumers,” he said, speaking exclusively to the Times of Oman. “Considering that fuel was 120 baisas per litre during the stable periods of the economy, higher fuel prices discourage the common man to save as his expenditure rises.”

“Combined with the value added tax ruling, which is to begin in 2018, and is definitely a higher concern, eats away the income earned by the average household to support their family, he added.

“Commuters travelling long distances would face the brunt of steep fuel prices as they end up spending more on fuel to reach far flung locations, which definitely is not economical in the long run.”

While Oman is currently working on rolling out a fuel subsidy scheme for lower-income workers in the Sultanate that is still yet to crystallise, Venkatesh supports the government’s plans to have such a safety net in place.

“Considering that this is far from the first time that an increase in the fuel price has arisen without any fuel subsidy in the works, the lower income consumers and taxi drivers would be affected more than the middle and higher income households,” he said.

“Higher fuel prices will erode the capacity of people to buy the products they require, and this is extremely dangerous,” said Venkatesh. “The extent to which people can buy goods and pay for services would be affected in the long run, owing to lower consumer confidence and lower savings.”

Since January 2017, the price of M91 fuel has risen by 15 baisas per litre.

M91 fuel cost 171 baisas a litre in January, before jumping to 186 baisas in February, and stayed at that rate in March. It dipped slightly to 180 baisas in April, before once again climbing back to its capped price in May. In keeping with the fluctuations in the global oil market, June saw M91 prices in Oman return to 180 baisas, before dropping even further to settle at 175 baisas in July. A slight rise in August meant residents had to pay 178 baisas a litre, before having to prepare themselves for even more expenditure, as M91 costs returned to 186 baisas in September.

M95 prices have also changed accordingly, having cost 186 baisas in January, before jumping by 10 baisas in February, and settled at 198 baisas per litre in March. April saw it drop slightly to 192 baisas, before shooting up once again to 199 baisas in May. June saw M95 prices hover around 191 baisas, before dropping down to 183 baisas in July. August prices stayed at 186 baisas mark, before stopping at 196 baisas for September.

The cost of diesel is also reflected to correspond with changes in global oil prices. After beginning the year at 195 baisas, jumping to 205 baisas in February and even further (208) in March, April saw costs reduced to about 200 baisas a litre, before once again reflecting a four baisa jump in May.