Look who needs to start conserving. Kind of funny. We have had to conserve due to THEIR actions. Now they will have to conserve DUE TO THEIR actions. OR they could build a lot more refineries and mine for more gas. That might actually be the cheaper option. I wonder what an Islamist would say ... hmmm ... we are not using their gas, nor are we forcing them to be so ... extravagant. Perhaps the Islamist would behead the whole lot and be done with the need for conserving. This does not however address the need for nuclear quite the way Iran's possession of nuclear weapons does.
Comment: Cheap energy addiction must end
By Jim Krane
Last updated: April 7 2010 16:36
The Financial Times
The Gulf Arab countries have never had much fresh water or democracy, but the inhabitants have always had energy to burn when it comes to cooling large homes and sparkling office towers.
During the six-year economic boom that ended in 2008, it was domestic energy that powered the sprawl of Abu Dhabi, Riyadh, Doha, and Dubai.
But the promise of cheap energy has gone wrong. Consumption has risen 7 per cent a year, reaching levels that even the vast reserves of the Gulf cannot match.
Five of the six states – Saudi Arabia, Kuwait, the United Arab Emirates, Oman and Bahrain – are unable to meet their own fast-rising demand for natural gas feedstock for electricity generation.
Only Qatar, owner of the world’s largest single gas field, has sufficient gas to generate electricity for the foreseeable future.
For the first time since their towns were electrified in the 1950s and 60s, the Gulf states – with 23 per cent of the world’s proven gas reserves – are confronting the need for energy conservation. This agenda was articulated by the Dubai School of Government in February, when it recommended conservation schemes for Gulf governments.
First among these is a price rise, especially on electricity, which, when it is not given away, sells for as little as a 10th of the price that it does in Britain and the US.
For instance, electricity prices range from zero in Qatar (for nationals; expatriates pay 2 US cents per kilowatt-hour) to initial rates of 1.5 US cents per KwH in Saudi Arabia; 2.5 cents in Oman; and, in Dubai, 2 cents for nationals and 5.5 cents for expatriates.
Prices like these are the reason that per-capita consumption of electricity in Kuwait and Qatar has surpassed that in the US.
Natural gas, too, is sold to utilities at a fraction of Henry Hub price, the US benchmark. This underpricing exacerbates consumption and kills incentives for upstream production.
If prices reflected global norms, consumption would ease and domestic energy efficiency increase. Higher revenues would encourage investment in gas production, which could alleviate future shortages.
Even better, renewable power would become more competitive, increasing the potential for powering the grid with a mixture of energies – and slowing the growth of the Gulf’s world-beating carbon footprint. The Gulf countries hold 0.6 per cent of the world’s population but produce 2.4 per cent of global emissions, according to the World Resources Institute.
But raising prices is tricky. Cheap energy is considered a right of citizenship in all six countries. Rulers rely on these giveaways to ensure political support. The Dubai School of Government recommends raising tariffs on nationals and expatriates alike, while mitigating the political costs by compensating citizens with an alternate subsidy.
Another way to cut energy use is through government-backed retrofits of inefficient buildings. In Dubai, Dilip Rahulan, who heads Pacific Controls, a specialist instruments business, believes energy use in the city’s buildings can be cut by a collective 20 per cent by fitting insulation, efficient windows, shading, reflective roofing and automated controls that adjust lighting and thermostats.
Environmental building standards would also help, but so would “green” loans that incentivise energy-efficient building plans. And “green zoning” could call for denser housing in low-rise buildings that maximise shade and breezes, while reducing lifts, cars and air-conditioners. The beautiful old caravanserais and merchants’ homes in Jeddah are examples of sustainable Gulf housing that have been left to crumble.
Other options could see rulers simply mandating energy conservation across their bureaucracies. and businesses regulated by government. Even simpler would be a ban on inefficient air conditioners, dishwashers and washing machines.
The notion of energy conservation – still largely an alien idea – will have to be brought into popular discourse and taught in schools.
There is one even greater resource that the Gulf could use: sunshine for solar-generated electricity.
The writer is the author of City of Gold: Dubai and the Dream of Capitalism
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