Alternative industrial fuel prices could benefit the Saudi economy

Oil consumption in Saudi Arabia has grown at around 5 per cent annually since the year 2000. This growth has raised concerns over the Kingdomâs ability to maintain its large export capacity in the future. Limited supply of natural gas and low energy prices have contributed to the substantial use of oil for domestic industrial production. The low administered oil and gas prices offered to industrial firms have further discouraged investment in non-hydrocarbon power generation technologies, and the production of higher value-added products. In this respect, decision-makers in the Kingdom have particularly expressed interest in displacing the use of oil in inefficient power plants by deploying other technologies. Alternative industrial fuel pricing policies can mitigate the growth in domestic oil consumption and facilitate investment in non-hydrocarbon power generation