One of the consequences of the falling oil price is the opportunity for the economies of the Gulf to look more closely at energy subsidies. This is money that could potentially be redirected to help improve energy systems and transform economies by creating jobs, stimulating sustainable economic growth and educating future generations. And to some extent, this is exactly what is happening.

While the short term looks settled from an economic perspective, looking further ahead, Gulf nations absolutely need to prepare for the case in which $40 a barrel oil, or sub-$40 oil, becomes the norm rather than a surprising anomaly. Policymakers first of all need to look towards the lowest hanging fruit, which is the GCC’s huge expenditure on subsidies, and take a disciplined approach to cutting them back.

Subsidies across Gulf states are provided irrespective of income, without a limit, to the extent that high-income groups actually benefit more from subsidies than low-income ones, making the whole system irrational and unfair. A model which is becoming increasingly painful as well as unsustainable for the Gulf’s economies, with profit and investment being hit as less oil and gas is being sold at market prices.

Moreover, the region is losing out on additional export revenues.

The GCC regimes are armed with major surpluses, which effectively enables them to keep energy subsidies high. Yet, political and social upheaval in the region has served as a reminder that economic mismanagement can have dramatic political consequences.

In Kuwait, the government has already put the wheels in motion to start reducing some state subsidy payments and is currently at an advanced stage of preparing a plan to cut subsidies for kerosene and electricity, the International Monetary Fund said recently.

Subsidy cuts are an important economic reform for Kuwait because lavish subsidies swallow about 5.1 billion dinars ($17.7 billion) annually, or roughly a quarter of the government’s projected spending this fiscal year, according to government figures.

Despite Kuwait’s vast oil wealth, such spending threatens to push the state budget into deficit later this decade, the IMF has warned.

So far, the government — like others in the Gulf — has shied away from major reform of its subsidy system because of political sensitivities. The government said in June that it had decided in principle to remove subsidies on diesel fuel, pending a study on how to deal with the negative impact on consumers, according to state news agency KUNA.

That measure was expected to save around $1 billion a year. It is also in the advanced stages of sending a proposal to the cabinet for reducing subsidies for kerosene and electricity.

Moreover, the government recently rationalised some allowances for Kuwaitis travelling for health care abroad. The IMF has been urging Kuwait to restrain spending on public wages and subsidies to make its finances more sustainable in the long term.

All Gulf states, with the exception of Kuwait, are expected to have to fund fiscal deficits this year in response to ‘rising social pressures and infrastructure development goals’.

But the IMF has urged Gulf governments to reduce subsidies and other current spending such as wages for public sector workers, rather than cut capital expenditure, “to exert a smaller drag on economic growth”. GCC countries are taking some steps in the right direction to pursue such reforms by rationalising consumption practices in favour of sustainable development.

Consumers, too, have an important play a role as such high levels of consumption will not lead to sustainable development. Change will require an understanding and a commitment by all members of society to preserve the existing resources for as long as possible and to develop new ones.

Although more measures on the part of governments to reduce the dependence on subsidies during 2015 would be a welcome move from both an economic and social perspective, the issue does not solely rest on official bodies, but on all members of society, whether nationals or expatriates.

The writer is a Senior Partner at Meysan Partners.