Oil field (Image: Flickr user johnny choura, used under CC license)Enlarge Photo
Cheap gasoline is good news for the economies of most countries, but not those that rely on oil exports.
The sustained fall in global prices has led oil-producing countries to search for ways to keep their revenues up.
In some cases, that means cutting back on cheap gas for their own citizens.
Kuwait will raise the price of its lowest-octane gasoline by 42 percent to 85 fils (30 cents) per liter, reports Bloomberg—or about $1.14 per gallon.
Prices of higher-grade fuels will increase as well, as the government cuts subsidies previously applied to fuel.
The new prices were set after an "exhaustive study" and are in line with averages for other countries in the regional Gulf Cooperation Council (GCC), the government said.
Gas pumpEnlarge Photo
Citizens in the six GCC member countries traditionally enjoyed heavily-subsidized gasoline, but the loss of oil revenues has led governments to cut back on those subsidies.
Last year, the United Arab Emirates announced a plan to eliminate subsidies and bring gas prices in line with international rates.
In addition to decreasing fuel subsidies, Kuwait is reportedly looking to the international bond market to raise money to cover its debts.
ALSO SEE: Era Of Cheap, Subsidized Gasoline To End In United Arab Emirates (Jul 2015)
It plans to raise up to $9.9 billion internationally, along with 2 billion dinars ($6.6 billion) locally.
Kuwait is also working to reduce its reliance on oil over the longer term.
The government is adding corporate taxes to generate more revenue, and merging various state-controlled entities in an effort to downsize.
Oil well (photo by John Hill)Enlarge Photo
Non-oil revenue will reach 1.6 billion dinars ($5.3 billion)—15 percent of total revenue—in the fiscal year that started in April, according to the government.
Neighboring Saudi Arabia is also attempting to wean itself off oil money, using oil revenue to create a sovereign investment fund.
Oil accounted for as much as 90 percent of that country's revenue last year, but falling prices left it with a $98 billion deficit last year.
The government plans to use existing funds—including proceeds from an initial public offering (IPO) in the state-owned Aramco oil company—to create a $2 trillion "Public Investment Fund" that will invest in other industries.
Measures like this will only become more important to oil-producing countries over the next few years.
Stricter global fuel economy standards will gradually decrease the demand for oil, forcing countries to find other permanent sources of revenue.
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