Intro
I met a traveller from an antique land,
Who said—“Two vast and trunkless legs of stone
Stand in the desert. . . . Near them, on the sand,
Half sunk a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them, and the heart that fed;
And on the pedestal, these words appear:
My name is Ozymandias, King of Kings;
Look on my Works, ye Mighty, and despair!
Nothing beside remains. Round the decay
Of that colossal Wreck, boundless and bare
The lone and level sands stretch far away.”
________________
Dubai never quite existed; it will ultimately be more real as poetry or symbol.
Its future is laid out as the poet Shelley supposed over 200 years ago: an impending colossal Wreck.
By some alchemist’s trick in reverse it has managed to turn a rich liquor of oil and gas into half-empty concrete towers, many only part-built on their pedestals.
It has tried to diversify from a dependence on oil wealth: but within a generation it has swapped one set of stranded assets for another class.
As microcosm, in existence and in time, its rise and fall stands as metaphor for any nation cursed with large reserves of exportable oil and gas.
Beyond the city boundaries this simulacrum of a “developed economy”, lone and level sands stretch far away.
Simulacrum.
Consider and compare the Dubai General Market Index with the US S&P 500 over the past five years (during which oil prices have dropped 40%).
Note: Source, Bloomberg
Dubai can claim its GDP is 90% non-oil related, but the shadow of oil in the United Arab Emirates, of which Dubai is part, is long.
Its large-producing relative, Abu-Dhabi, has shouldered Dubai’s diversification and debts for decades.
Only seven nations in the world export above 2mb/d of oil, or put another way can command over $50bn / year gross revenues selling it (at $60/bbl), and so can try to make a living from it.
Source: Wikipedia
Of those seven, Russia, the US and Canada have economies that manage oil and gas cycles via diversification.
The other four – Saudi Arabia, Iraq, Kuwait and the UAE – rely almost totally on oil and oil products for cash and GDP.
These cursed few are now out of time to diversify.
Brute force energy turns out to be a short-term play.
To rely on oil and gas – a random endowment of crude fuels – as your dominant source of wealth was, it seems, a one or two-generation invention.
Energy, a far greater concept than mere carbon, has numerous forms.
The historic brawn of extraction and combustion has ceded overnight to the almost-imperceptible universal technologies of energy conversion: and common access now shifts substantial energy reserves from the few to all.
Solar, wind and battery-storage now allow every nation on earth to generate at least a sizeable fraction of their own energy locally, and begin the long march away from import dependency. These technologies will soon account for over 10% of global power production, and continue to grow quickly.
Even transportation has leapt the energy species barrier – electricity now swallows the annual growth in vehicle energy demand, attacking oil’s final fortress.
Thus for almost four years the main oil exporting nations (OPEC and Russia) have attempted to force prices up via production constraints even as demand has slowed, and other supplies from around the world have grown.
But that doesn’t trick arithmetic. At best prices have become becalmed at about $60-70/bbl, whilst volumes have had to stagnate. Result, less revenue as far out into the future as is able to be seen.
Even Saudi Arabia has had to start selling off parts of its state oil firm in a gesture part confidence, part concern.
Centuries before Shelley, other writers also pondered the vastness of the long-term:
But at my back I always hearTime’s wingèd chariot hurrying near;And yonder all before us lieDeserts of vast eternity.
Ignoring the heft and bulk of their grand infrastructure, oil and gas producers should perhaps heed the lightness of verse more, and confront the fate of their energy.
Dubai never quite existed: it is almost certain only poets will ever understand it.
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