The United Arab Emirates is well-known for its oil and gas reserves and the possibility to export these products to different nations, which makes this country a significant partner in the global market of energy. The government takes all the necessary steps to promote innovation and the best technologies to support the oil industry. The establishment and control of oil prices in the UAE are the burning topics in the country, and many articles discuss these themes from different perspectives. In this paper, special attention will be paid to the investigations of Dargin, Saderuddin and Barghathi, and Tabash and Khan.
As one of the leading producers of oil in the world, the UAE has to work hard to continue developing other industries and strengthen its economic activities. There are many methods to control oil prices in the country, and Dargin is the author of the enhanced oil recovery (EOR) method. In his article “Oil production and consumption: Strategies for the UAE”, Dargin (2014) explained the worth of the EOR method as the possibility to increase natural gas consumption, establish working renewable energy goals, and decrease the rising of oil consumption. Several strong recommendations from the point of view of technological innovations were developed in the article. In 2012, the UAE produced about 17.3 million barrels per day, which increased its oil reserves up to 489.4 billion barrels (about 36% of global supply) (Dargin, 2014). The author developed a number of figures to demonstrate how effective or ineffective EOR methods can be, and what the current oil situation is in the country.
After a thorough evaluation of gas demand, oil prices, and consumption of energy resources, Dargin introduced several policies to stabilize oil and gas consumption. His ideas were based on the necessity to search for alternative resources like CO2 incorporation, nitrogen usage, and solar thermal products. EOR is possible through the promotion of technological innovation in the transportation section, new mass transit systems, and reduction of gas consumption or carbon emissions.
The article “The impacts of the introduction of VAT on the audit profession and economy in the UAE” is written by Saderuddin and Barghathi in 2018 and is based on the auditors’ perspective. The goal of the author is to discuss value-added tax (VAT), as another means of indirect taxation, and its impact on national revenues, tax system, and the gross domestic product (GDP). In general, the development of the country’s economy may undergo considerable changes due to the implementation of VAT. Auditors are free to demonstrate different attitudes toward VAT and the necessity to control the economy of the UAE. However, in general, the majority of professionals agreed that VAT did not have a considerable impact on audit as a profession and its quality. On the contrary, an auditor should be a person to ensure the correctness of VAT amounts (Saderuddin & Barghathi, 2018). In oil price control, VAT is just another step to be taken properly.
The authors of the article underlined that it is important for the UAE to stabilize its oil prices and solve economic problems associated with unpredictable falls and required rises. The introduction of VAT is a good step towards sustainable economic growth, promoting low-margin business, and control of transparent dealings. Although the chosen qualitative research and literature review presents rather subjective information, the article contains helpful information to understand the current economic and oil-related situation in the UAE.
During a considerable period of time, the UAE was defined as a country with stable oil prices. However, after the year 2004, the country underwent considerable economic changes that resulted in price growth from $20 per barrel to $31 or even $140 per barrel (Tabash & Khan, 2018). In the middle of 2015, oil price again reached the mark of $60 and remains the same today (Tabash & Khan, 2018). However, the current situation in the country along with the penetration of India and Asia to oil and gas global market provokes uncertainty in the oil price situation.
“The impact of oil price volatility, gross domestic product, foreign direct investment on Islamic banking investments” by Tabash and Khan focuses on the major reasons for price changes and their impact on the GDP. In total, there are four variables the relationships of which have to be analyzed: oil price fluctuations, foreign direct investment (FDI) inflow, GDP, and Islamic investments (the only independent variable) (Tabash & Khan, 2018). The authors proved a significant relationship between these variables with the help of statistical tests and quantitative studies, explaining the role of oil prices on banking investments and the importance of price stabilization.
In general, the articles under analysis showed that oil prices remain unstable in the UAE because of several reasons. There are many external and internal threats and opportunities for the country to establish profitable and reasonable prices. The idea of EOR by Dargin helps to recognize available alternatives. VAT implementation offered by Saderuddin and Barghathi has several benefits. Finally, the analysis by Tabash and Khan contributes to understanding the situation in the country and the impact of oil prices on development.
References
- Dargin, J. (2014). Oil production and consumption: Strategies for the UAE. The Emirates Occasional Papers, 82.
- Saderuddin, A., & Barghathi, Y. (2018). The impacts of introduction of VAT on the audit profession and economy in the UAE: Auditors’ perspective. Accounting and Management Information Systems, 17(3), 406-439.
- Tabash, M. I., & Khan, S. H. (2018). The impact of oil price volatility, gross domestic product, foreign direct investment on Islamic banking investments: An empirical evidence of the United Arab Emirates. International Journal of Energy Economics, 8(5), 306-312.