The day the oil runs dry

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Museums remain a long way from people's thoughts in Dubai.

For centuries civilisations have been built on trade. Athens on silver, Rome on wine and olive oil. The UAE, however, is built on a different kind of oil. But its reserves cannot last forever, which has seen two cities embark along very different paths, as Jamie Stewart reports.

The Kempinski Emirates Palace, Abu Dhabi, is home to an exhibition showcasing the under-construction Saadiyat Island development. An exhibition that has been toured, among many, by one George W Bush.

The exhibition is bordered by a wall covered with facts and figures concerning the growth of the UAE. Hidden among this wall is a white board sporting a series of bar charts that may have raised the eyebrows of a keen-eyed Bush on his January visit to the capital.

As the chart states, in 1975, 21.2% of the UAE's gross domestic product was generated by the service sector, while 67.7% came from the mining and oil industries. By 2005, the service sector accounted for 42.1%, while mining and oil accounted for just 32.8%.

Oil, as we know, cannot last forever. Both Abu Dhabi and Dubai have begun to demonstrate that it's time to begin laying the groundwork within which their societies can operate without the financial benefits and guarantees that oil brings to the respective populations.

Abu Dhabi, through such developments as the Louvre and the Guggenheim, has begun to signal its intentions through a gradual shift towards cultural tourism, pursuing its responsibilities to provide its people with cultural amenities worthy of a capital city.

One hundred and twenty kms down the road lies Dubai. The city of man-made islands, super-tall skyscrapers and indoor ski slopes. The city in which you can bob through a shark tank on an inflatable ring is planning to diversify along a very different path.

But there is a fine line to tread between the opening up of a society to a world of globalised traditions, and remaining sensitive to regional traditions. Treading this line becomes even more perilous when the source of income that has been relied upon for generations threatens to run dry.

The peak oil question

In 1956 Marion Hubbert published his theory on the capacity of oil fields and natural gas reserves, correctly predicting that US oil production would peak between the late 1960s and early 1970s.

Hubbert's predictions were based around a bell-shaped curve, which came to be known as the Hubbert Curve, and the peak as "peak oil." By theorising that oil production would peak when known reserves were at their highest, Hubbert was able to track the approximate time frame for depletion.

Today, experts are in wide agreement that the point of global peak oil is upon us. In June, Thomas Pickens, BP Capital Management hedge fund chairman, said, "I do believe we have peaked out at 85 million barrels a day globally."

With a little more urgency, a Financial Times report last year warned that the world would face an oil crisis "within the next five years." With words such as "crisis" now making their way into the oil man's vocabulary, just how long do Dubai and Abu Dhabi have left?

Measuring oil reserves is no exact science, and even proven reserves can only be estimated. The BP statistical review of world energy, published last June, estimated the UAE's proven oil reserves to be 97.8 billion barrels.

Reports are in general agreement that Abu Dhabi has considerably more time on its hands than Dubai until the oil runs dry. Estimates say that Abu Dhabi's reserves should last about 100 years, while Dubai appears to be facing a more urgent scenario, with estimates ranging from 10 to 15 years.

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READERS' COMMENTS

Peak oil
Posted by Clifford. J. Wirth, Manchester, NH, USA on Sunday 9 November 2008 at 19:22 UAE time

According to most independent scientific studies, global oil production will now decline from 74 million barrels per day to 60 million barrels per day by 2015. During the same time demand will increase 9 percent.

No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always exceed production levels; thus oil depletion will continue steadily until all recoverable oil is extracted.

Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment.

We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from "outside," and without the power grid virtually nothing works, including home heating, pumping of gasoline and diesel, airports, communications, and automated systems.

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