SHIFTING GEARS IN SAUDI ARABIA133especially that now efficiency measures have been combined with higher
electricity and oil product prices, which had the desired effect of slow-
ing demand growth,” al- Falih said. He attributed the drop in crude oil
demand to the subsidy reforms and to increased production of natural
gas, which substituted for oil in power generation.^38
Higher prices curtailed a few egregiously wasteful practices. One was
the widespread use of diesel- powered generators to provide electricity
to commercial buildings. Diesel had been so cheap that owners of shop-
ping malls saved money by disconnecting from the central grid— where
commercial electricity rates had risen in 2012— and generating their
own power. The practice of running noisy, smoke- belching generators
all day and night exacerbated oil demand and local air pollution and
enlarged the Saudi carbon footprint. The steep drop in diesel demand
showed that such practices were being abandoned.
Aramco officials hoped that higher gasoline prices might also dis-
courage joyriding and car accidents. Fuel was so cheap that young men
drove aimlessly to pass time, which aggravated pollution, traffic conges-
tion, and oil demand.^39 The joy of driving often brought tragedy. Reck-
less driving had given Saudi Arabia the grim title of world leader in per
capita deaths from car crashes, the leading cause of death for Saudi males
aged sixteen to thirty- six.^40 Smuggling was another major focus of the
reforms, but Aramco’s hopes that higher prices would undercut fuel
trafficking only went part way. Neighboring countries also increased
prices. Saudi diesel fuel still carried a hefty discount in comparison with
prices in the UAE, Oman, Jordan, and other neighbors.
In January 2016, a few weeks into the new price environment, I dis-
cussed the subsidy reforms with several prominent Saudi merchants,
the heads of big family business groups in the Eastern Province. Their
responses, over dinner in Dhahran, were mixed. While some said the
reduction of smuggling and waste was in the national interest, others
said the reforms would inevitably bring on inflation. One young Saudi
merchant, the head of a dairy business, told me he would be forced to
pass along the increased business costs in the form of higher prices for
milk and butter. Higher diesel prices meant that trucking his products
to market was more expensive. Costs for air conditioning his cow barns