Gas subsidies cut as oil hits 12-year low

Bahrain and Oman are reducing government subsidies on gasoline, becoming the latest Gulf Arab countries to try to cut back on spending and offset the effect of oil prices, which have fallen to their lowest level since 2003.

On Jan. 12, gas prices at the pump rose by up to 60 percent in Bahrain, climbing to $1.25 per gallon (125 fils per liter) for regular gasoline and $1.60 per gallon (165 fils per liter) for premium fuel. Hundreds of people lined up at gas stations a day earlier to fill their cars before the higher prices went into effect.

The tiny island-nation in the Persian Gulf ended subsidies on meat and poultry in October, increasing consumer prices between three and four-fold. Bahrain plans to make further cuts in electricity and water subsidies in March.

Meanwhile, Oman said it would reduce gasoline subsidies starting Jan. 15, with prices set to rise by 33 percent for premium fuel and 23 percent for regular fuel.

The moves come as crude prices closed Jan. 11 at $31.41 a barrel on the New York Mercantile Exchange - the lowest in 12 years.

The dip in global oil prices has cut into the revenues of oil-exporting countries, including many Gulf Arab states where citizens have become accustomed to generous government subsidies and state handouts.

To reduce their growing budget deficits, the United Arab Emirates and Saudi Arabia reduced fuel subsidies last year. Kuwait's parliament said Jan. 12 that it, too, is planning to study subsidy reform.

- Associated Press