Impact of Domestic Fuel Price Reforms on the Use of Public Transport in Saudi Arabia

About the ProjectWe developed the KAPSARC Energy Model for Saudi Arabia (KEM-SA) to understand the dynamics of the country’s energy system. It is a partial equilibrium model formulated as a mixed complementarity problem to capture the administered prices that permeate the local economy. KEM-SA has been previously used to study the impacts of various industrial fuel pricing policies and improved residential efficiency on the energy economy. The passenger transportation model presented in this paper helps understand more of the end-use energy demand.Key PointsIn 2016, policymakers in Saudi Arabia increased domestic transportation fuel prices, which are expected to approach market levels in the near future. Current low crude oil prices offer an excellent opportunity for policymakers to deregulate the passenger transportation sector without a significant change in local fuel prices. We developed a bottom-up transportation sub-model and integrated it with the KAPSARC Energy Model (KEM) to assess whether consumers could afford such reforms; and the resulting travel mode choices, energy consumption levels and revenue. We do not consider price-induced efficiency improvements; hence, the results would represent an upper bound for the shift to public modes.Despite a deregulation of the passenger transportation sector, Saudi households would continue to allocate one of the lowest transport budgets (as a percentage of income) in Gulf Cooperation Council (GCC) countries and also stay within Saudi Arabian historical boundaries.Deregulating fuel prices would encourage consumers to travel by more efficient public transport modes, as they become available in the near future, leading to significant energy savings and CO2 emissions reductions of between 4 million to 26 million metric tons (mt) per year.The Kingdom would receive an annual average $8.2 billion as additional revenue from domestic sales and exports in the varying crude price scenario and $5 billion in the fixed $60/bbl scenario.Despite the increase in transport fuel price, the net gain for Saudi Arabia in the varying crude oil price scenario remains positive as a result of substantial increase in revenue and the introduction of more convenient public travel modes.Our findings show that analyzing energy policies using empirical estimates are generally valid even for large variations in price; however, if new transport modes and technologies are introduced in Saudi Arabia, consumer response may be slightly greater than that of empirical estimate, which did not account for such new modes.

关于本项目：本团队研发了沙特阿拉伯能源模型（KAPSARC Energy Model for Saudi Arabia，简称KEM-SA），旨在深入探究该国能源系统的动态变化。该模型以混合互补问题为框架，部分均衡地构建，以捕捉渗透至本地经济中的管理价格。KEM-SA模型先前已被应用于研究不同工业燃料定价政策及住宅效率提升对能源经济的影响。本文所提出的客运交通模型有助于更全面地理解最终能源需求。关键要点：2016年，沙特阿拉伯的政策制定者提高了国内交通燃料价格，预计未来将逐渐接近市场价格。当前低廉的原油价格为政策制定者提供了一个绝佳的机会，在不显著改变本地燃料价格的情况下，对客运交通领域进行去监管。我们开发了一个自下而上的客运子模型，并将其与KAPSARC能源模型（KEM）集成，以评估消费者是否能够承受此类改革；以及由此产生的出行方式选择、能源消耗水平和收入。我们未考虑由价格引发的效率提升；因此，结果将代表向公共交通模式转变的上限。尽管客运交通领域进行去监管，沙特家庭仍将继续分配最低的运输预算（占收入的比例）之一，并且在沙特阿拉伯历史边界内保持稳定。燃料价格去监管将鼓励消费者使用更高效的公共交通模式，因为这些模式将在不久的将来投入使用，从而实现显著的能源节约和每年4千万至2千6百万公吨（mt）的二氧化碳排放量减少。王国将在各种原油价格情景下，每年平均获得82亿美元来自国内销售和出口的额外收入，在固定每桶60美元的情景下获得50亿美元的收入。尽管运输燃料价格上升，但在原油价格波动的情景下，沙特阿拉伯的净收益仍然保持正值，这得益于收入的显著增加和更多便利的公共交通模式的引入。我们的研究结果表明，使用经验估计分析能源政策通常有效，即使在价格出现大幅波动的情况下也是如此；然而，如果沙特阿拉伯引入新的交通模式和新技术，消费者的反应可能略大于经验估计，而后者并未考虑此类新模式。