The Ministry of Energy has lowered the prices of petroleum products by up to seven per cent for February.

A high level committee chaired by the Undersecretary of the Ministry of Energy and participated by the CEOs of the oil marketing and distribution companies reviewed the average prices of oil at the international markets.

New price of diesel will be Dh1.37 plunging 14.90 per cent since January 2016 price level of Dh1.61 a litre.

The price of E Plus 91 has been at Dh1.40 a litre down 7.28 per cent month-on-month from Dh1.51 in January.

Super Octane-98 will be cheaper by 6.50 per cent to Dh1.58 from Dh1.69 a litre.

Special or Mumtaz-95 will be filled at Dh1.47 a litre down 6.92 per cent from January level of Dh1.58 a litre.

Prices will be effective February 1.

The economists and energy experts have all praise for the UAE policy of economic reforms and petroleum price de-regulation.

The UAE lifted subsidies at a very auspicious time particularly from the point of view of the customer said Dave Ernsberger global editorial director Oil Platts.

Prices have fallen substantially already in the wholesale markets and this has been reflected at the pump he said

"Early indications are that this trend may reverse soon though - crude oil has bounced back by almost 20 per cent in value at the end of January and this will start to put upwards pressure on gasoline and diesel in February if the trend continues" said global editorial director Oil at Platts.

The maximum decrease was seen in the price of E-Plus 91 that dropped 7.28 per cent to Dh1.40 a litre; Super-98 fell 6.50 per cent from January to Dh1.58 and Special dropped 6.962 per cent.

Since July diesel plunged 33 per cent from Dh2.05 a litre to Dh1.37 a litre; E Plus-91 dropped 32.36 per cent from Dh2.07 a litre to Dh1.40 a litre; Super-98 is down 29.77 per cent from Dh2.14 a litre in July to Dh1.47 a litre.

Alp Eke a senior economist at National Bank of Abu Dhabi said subsidies in UAE constitute almost six per cent of GDP or around $23 billion according to 2014 IMF data energy. But with recent pressures on the budget energy subsidies are being gradually removed.

"Benefits of the subsidies will be felt in the long run UAE economy will save only modestly but the benefit will add up in the future years. UAE has already reduced some of the subsidies starting from gasoline prices" Alp Eke said.

Petrol price de-regulation initially created upward pressure to consumer prices.

Since August through December due to reduction of oil prices globally the gasoline price at the pump declined he said. For average UAE household spending on transportation is 11 per cent of the budget while major chunk is consumed by housing and utilities spending which is almost 40 per cent.

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The recent water tariff increase of 6.6 per cent introduced from January will put pressure on housing and utilities component of the budget he said.

Abu Dhabi's consumer price index increased 5.28 per cent year-on-year in December 2015 mainly driven by cost of housing/utilities and furniture household maintenance.

Abu Dhabi has been ranked 33rd most expensive in 2015 moving up 35 spots from last year.

Commenting on impact the lower petroleum prices would have on consumption economic growth and cost of doing business the economist said "the impact of removal of energy subsidies on the economy will be seen in the long run."

Partial or total removal of subsidies is initial steps to reduce burden on the budget and eliminate in-efficient allocation of resources he said.

With additional resources available and less pressure on the budget government spending will be more focused on diversification efforts investments to logistics manufacturing will increase and will be able to reduce reliance.

For an average UAE household spending on transportation is 11 per cent of the budget while the major chunk is consumed by housing and utilities spending which is almost 40 per cent.

Arab world biggest economy Saudi Arabia last month followed the UAE's footsteps and by reducing subsidies on petroleum products by 50 per cent.

Kuwait Oman Bahrain have also taken steps to cut subsidies on petroleum prices as oil revenues dip.