How can a country with so much oil not have enough fuel for its own people? The UAE relies on costly imported petrol. One substantial way to avoid this will be to diversify fuel options.
Petrol shortages should energise the search for alternatives
The ongoing fuel shortages in the Northern Emirates have left many motorists scratching their heads. How can a country with so much oil not have enough fuel for its own people?
The answer is simple. Although the UAE is blessed with huge oil reserves, its ability to refine that oil into fuels like petrol has not kept up with rising demand. As a result, it has to rely on imported petrol that costs considerably more than what you and I pay for it at the pump. Who picks up the tab? Retailers like Enoc and Eppco.
Enoc expects to incur a $735 million (Dh2.7 billion) loss on retail sales in 2011, an 80 per cent increase over last year. With international oil prices expected to stay high, Enoc's losses will continue to grow, compromising its ability to provide fuel to motorists.
The simplest solution would be to raise pump prices in line with import prices. This way, retailers would not run losses and would be better equipped to supply us with enough fuel. This policy would also help curb harmful greenhouse gas emissions by getting people to rely more on car pooling and public transport. But given the broader political climate, we're not likely to see a price hike anytime soon.
A more sustainable solution would be to diversify our fuel options. This could be achieved through the introduction of hybrid and electric vehicles. Hybrids use a mixture of gasoline and electric energy stored in batteries whereas electric vehicles (EVs) run entirely on battery power.
With hybrids and EVs, we would not need to rely as much on imported gasoline because we could "refuel" our car with electricity drawn from the power grid.
The concept might seem futuristic but it's not. Over the past years, car manufacturers have invested huge sums in this technology. Today, almost every manufacturer from Mercedes to Mitsubishi has at least one hybrid model in its fleet. Many of them are also getting into fully electric cars. Even Rolls-Royce is developing the 102EX, an electric-powered version of the classic Phantom.
Governments around the world are following in the footsteps of manufacturers in promoting EVs and helping to bring costs closer in line with those of conventional cars. The US has pledged $2.4 billion in federal grants for electric cars and batteries while China has committed $15 billion to start a national electric car industry. Other governments have established tax credits, subsidies and rebates to reduce the purchase price of electric cars. Denmark's rebates are so attractive that motorists are able to buy an electric car for about half the price of a conventional car.
As more and more countries introduce EV-friendly policies, prices will continue to go down. It is expected that by 2015 EVs will be on par with conventional vehicles without the need for any government support. EVs could become so cheap that contract providers could give them away and make their money from the service, the way mobile phone companies do.
In the UAE, we are starting to see some promising steps in that direction. Abu Dhabi's Masdar City is running a pilot project to test whether EVs can be successfully integrated into the city's transportation network. Their fleet of electric cars consists of five-door Mitsubishi hatchbacks with a range of 150km. The vehicles are powered by lithium-ion batteries with a top speed of 130km/h. They can be recharged from empty to 80 per cent in 30 minutes. Some of them even come equipped with an iPad that shows you your battery life and exactly how many more kilometres you can go before your next top up.
Going one step further, the UAE could adopt solar-friendly policies which would allow drivers to produce solar energy at their homes, offices and factories and use that electricity to power their vehicles. The surplus energy produced by these micro-systems would be fed back into the national grid.
The idea of filling up the car in the driveway with "fuel" produced from a solar system on the roof might seem unlikely. In parts of the world such as Germany, this is starting to happen. So why not in the UAE? Clearly, there is no shortage of sun.
For electric cars to become a viable option in the UAE, there would need to be significant investments in both infrastructure and regulations. For one, transport authorities would need to introduce a car registration category for electric vehicles.
In the long run, these investments would pay for themselves in terms of reduced fuel import bills and lower air pollution levels. In the process, motorists would have one less thing to worry about during the daily commute.
Vahid Fotuhi is an energy and environment analyst based in Dubai