THE POLITICS OF REFORM143consumption— which for electricity dropped 2 percent in 2015 and
4 percent in 2016 and for water dropped 2 percent and 3 percent over
the same period.^14
For Qatari citizens, electricity and water will probably remain free.
The country produces huge amounts of natural gas relative to its popu-
lation. Domestic demand remains too small to threaten exports anytime
soon. Only 7 percent of gas production is consumed in the power sec-
tor; 80 percent is exported.^15 With an absolute monarch dependent on
citizen support, Qatar appears comfortable giving citizens unlimited free
utility services.^16 “The locals have this right to free power and water,” said
an expatriate manager within the electricity sector. “For the foreseeable
future it won’t change.”^17
OMANOman is in a much tighter spot than either Kuwait or Qatar and argu-
ably is worse off from an energy standpoint than any of the other Gulf
monarchies. Average 12 percent yearly growth in electricity consump-
tion has tripled power demand in just a decade.^18 Despite this scorching
growth, per capita consumption in Oman remains the lowest in the Gulf,
since Oman got off to such a late start in development.
Oman’s electricity regulator has warned that the sultanate, with mod-
est hydrocarbon reserves, cannot tolerate the indulgent levels of power
and water demand seen in the other monarchies. The fear is twofold.
First, subsidies have locked in high rates of demand by encouraging an
energy- inefficient building boom. Second, this path dependence is being
set in place at a time when the costs to provide these services are rising
dramatically.
Oman’s oil and gas production has been shifting away from the sul-
tanate’s small and depleting conventional reserves to its technically chal-
lenging deposits of unconventional oil and gas.^19 Production costs have
risen, but Omani policy makers have been reluctant to pass along those
cost increases to customers, lest such reforms lead to unrest.