["Australian Journal of Agricultural and Resource Economics, EarlyView. ", "\nABSTRACT\nFuel subsidies in resource‐rich economies distort consumption and undermine fiscal efficiency. This study exploits Kuwait's 2016 gasoline (petrol) price reform—which raised prices by up to 83% after nearly two decades of price stability—to estimate short‐run price elasticity and analyse consumer behavioural responses under entrenched subsidies. Using high‐frequency, station‐level daily gasoline sales data and traffic data combined with Regression Discontinuity in Time (RDiT) designs, the study causally identifies the reform's impact on gasoline demand. Mechanism analyses evaluate substitution across octane grades, driving behaviour, public transport use and extensive‐margin responses such as vehicle ownership or efficiency. Contrary to the literature documenting limited price responsiveness in subsidy‐heavy rentier states, the reform produced a sharp and immediate drop in fuel consumption, with a short‐run price elasticity of approximately −0.45. The dominant response was intra‐product substitution, as consumers persistently shifted from octane 95 to 91. Driving reductions were modest; public transit use and extensive‐margin adjustments were negligible. High‐octane (98) users showed near‐zero responsiveness. By raising prices, the reform likely reduced the estimated KD 7 million (US$24 million) in pre‐reform waste as drivers switched to suitable, cheaper fuel. The reform also reduced deadweight loss by over KD 55 million (US$179 million) annually, with total welfare gains—accounting for externalities—reaching up to KD 97 million (US$312 million) annually. This study shows price reforms in rentier states can yield substantial efficiency and welfare gains, but require complementary policies to address informational frictions and limited substitution options.\n"]