Saudi Arabia may institute higher fuel economy standards; keep 45-cent/gallon gas
According to Green Car Reports, the Kingdom's fleet standards are more lenient than those in the US and considerably easier to meet than Chinese or European standards. Fleets will need to return an average of 12 kilometers per liter (about 28.2 miles per gallon) by 2020. In the near term, though, vehicles will need to feature fuel economy labels as early as next month, and will need to meet more stringent fleet standards by late 2015 or early 2016. The push to increase fuel efficiency of Saudi cars is so intense that the country is even considering a program like Cash for Clunkers, in a bid to get older, less fuel efficient cars off the roads.
As for the motivation behind this sea change, it's a fairly simple one to break down – Saudi energy demand is increasing at a rate that the economy can't support, with a steady four-to-five-percent increase every year, according to Green Car Reports.
While we can get behind the reasoning and the new standards, what we don't understand is why fuel prices will remain at 45 cents per gallon. As GCR points out, this is not unlike the American model, where prices are intentionally kept lower while higher standards are mandated. But with such a ridiculously low fuel price, it seems odd that there isn't a proposal for at least a small price increase to help curb demand.
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