Saudi mulls natural gas price hike to reduce expensive subsidies and curb energy waste

In 2013, Saudi Arabia may raise what is currently the world's lowest price for natural gas, in order to reduce expensive subsidies and curb energy waste, as per Reuters. A price hike would be an important economic shift for the country but a difficult one, since it would risk hurting the competitiveness of industries such as petrochemicals. Energy-hungry industries have boomed in Saudi Arabia over the last decade, largely due to the cheap gas, priced for domestic industrial users at just US$0.75 per million British thermal units (mmbtu) - a small fraction of prices paid by competitors around the globe. The Saudi price, unchanged for decades, was set when gas was a plentiful by-product of the country's giant oil fields. Since then, Riyadh has shied away from raising the price, despite escalating production costs, for fear of hurting companies which provide jobs for a young and growing population. But sources of gas that can be tapped cheaply have now run low, a shortage intensified by waste. So Saudi Arabia is increasingly having to look at costly offshore or unconventional sources of gas to meet soaring demand.
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