Oil raises the cost of the economy.. and Jordan must accelerate the transition to local and renewable energy
Amman4 min read
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The global wave of rising oil prices imposes new pressures on the costs of production and consumption in Jordan, as attention turns to the ability of economic sectors to absorb this increase, in parallel with the need to accelerate investment in local and renewable energy sources, as a path that enhances energy security and limits the impact of fluctuations in foreign markets.
Economic experts, in their talk to «Al-Rai», believe that the repercussions of rising oil prices do not stop at the cost of fuel, but extend to the costs of operation, purchasing power, and investment and employment decisions, making the diversification of energy sources and increasing the efficiency of their use an economic priority that goes beyond dealing with the current wave of prices.
Salehiyeh: The cost of energy is transferred to various sectors of the economy
Professor of Economics at the German Jordanian University, Professor Dr. Luay Salehiyeh, said that the nature of the Jordanian economy, as a small, non-oil economy, makes it more affected by changes in global energy markets, explaining that its repercussions may affect growth, per capita income, investment, and employment.
He added, in a conversation with «Al-Rai», that energy represents a main input in production and consumption processes, and therefore the rise in fuel costs increases the operational burdens on establishments, while households are exposed to additional pressure on their spending.
He pointed out that the increase in the cost of living may lead to a decline in real income and consumer spending, while productive establishments face rising costs that may pressure their activity and competitiveness, especially if global prices remain at high levels for long periods.
Manufacturing industries in the spotlight
Salehiyeh pointed out that productive industries, primarily manufacturing industries, are among the sectors most exposed to these pressures, due to their intensive reliance on energy in their operations and production.
He explained that the rise in operating costs pushes establishments to improve energy consumption efficiency and seek more efficient alternatives, which helps them maintain their competitiveness, especially in export-oriented sectors.
2027.. A test for sustainable growth
Salehiyeh warned that the continuation of the energy crisis until the second quarter of 2027 may increase inflationary pressures and weaken purchasing power, with possible repercussions on investment, employment, and economic growth.
He stressed that addressing these repercussions requires long-term policies aimed at reducing dependence on imported energy sources and expanding the options available to the economy, rather than merely addressing the effects of rising prices in the short term.
For his part, Professor of Economics at Mu'tah University, Professor Dr. Hassan Abdul Rahman Al-Amro, said that developments in oil markets are directly reflected in the Jordanian economy through fuel costs, due to the pivotal role of energy in various economic activities.
He explained, in a conversation with «Al-Rai», that the rise in energy-related burdens affects production and consumption costs, and may pressure purchasing power and real income, while the continuation of pressures may affect some investment and employment decisions.
He added that diversifying energy sources and increasing their efficiency form a fundamental part of building a greater ability to deal with external variables and reduce their impact on economic activity.
Sun and wind.. An investment that transcends the price crisis
Al-Amro emphasized that the expansion of renewable energy, especially solar and wind, represents a strategic opportunity for Jordan, in light of the natural potential that the Kingdom possesses.
He said that investing in these sources should not be linked only to rising oil prices, but should be viewed as a long-term approach that reduces the economy's exposure to energy market fluctuations and supports the stability of the supply system.
Local gas enhances diversity of the mix
Al-Amro pointed to the importance of benefiting from local natural gas resources and developing them, as an option that can contribute to diversifying the energy mix and reducing dependence on imported sources.
For his part, Salehiyeh stressed the importance of expanding solar and wind energy and benefiting from natural gas, emphasizing that turning these options into an economic lever requires sustainable investments and clear and stable policies.
From the oil bill to a more resilient economy
The interventions of the two experts reveal that rising oil prices place Jordan before a challenge that goes beyond the fuel bill, and it consists of enhancing the economy's ability to absorb external shocks without the fluctuations of global markets turning into sustained pressures on production and consumption.
Conversely, this challenge opens up space for accelerating investment in renewable energy and developing local resources and increasing the efficiency of consumption, which enhances energy security and supports the competitiveness of productive sectors.
With this path, oil market fluctuations can be transformed from a short-term pressure into a driver for accelerating the diversification of the energy mix and building an economy more capable of dealing with global variables.
