There's an old Jackie Mason joke, "I love Puerto Rico. I go there every year– just to visit my hubcaps." I mention this funny/racist joke because gasoline prices have more than doubled in the last four years and the money's going… where exactly? Sure, Exxon Mobil and their oil baron friends are posting quarter after quarter of historic record profits. But how many cigars can you light with a $100 bill? Someone else must be getting fat and happy too, right? Right. Investment adviser, Ron Paul fan and economic blogger Michael "Mish" Shedlock posits that a lot of the oil revenue is headed towards the UAE's capital city. How much oil revenue? Only about six percent of the UAE's take home comes from actual oil. However, the JAFZA free trade zone offers many perks for those with huge surpluses of cash to, uh, invest. Check it: come 2009 Dubai will feature the world's tallest building (The Burj Dubai — 2,684 ft), the world's tallest structure (The Al Burj — 3,937 ft), the world's tallest hotel (The Burj al Alam — 1,644 ft), the world's first underwater hotel (Hydropolis), the world's biggest amusement park (the Disney World trumping Dubailand) and even more indoor skiing. Not to mention the world's largest waterfront and hundreds of luxury man-made islands. Let's put it this way: Dubai is home to about 20 percent of the world's [mechanical] cranes. Have a look.
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I can’t say I’m sorry to hear that. One of those buildings going up has my condo/hotel room in it. I hope some rich petro worker rents it. On the car front it seems a few model introductions have taken place in Dubai recently.
Interestingly enough, Dubai’s oil almost ran out already. They’ve just been smart enough to invest the dividends a while ago and turn themselves into a huge hub between Europe and Asia.
To see how oil revenues are invested (poorly), look at Venezuela (“social” programs), Saudi Arabia (keeping the Royal family happy, and building a university), Russia (making everybody, and in particular ex-FSB members richer), or Abu-Dhabi (cf Saudi Arabia).
Sovereign funds have also been fueled (!) by oil revenues. With the U.S. real estate and stock markets diving down, it won’t be long until crown jewels are bought by said funds…
I think it’s great. We trade natural resources for hotels. I don’t live there nor will I go to dubailand for vacation so I don’t give a hoot what they buy.
Building a huge city up right across from Iran is pretty dumb. A few errant missiles and they are toast. These people are rich not because they are smart or gifted but because of what is under the ground. Eventually it will run out and I hope to live long enough to see what happens next.
Not to mention that plenty goes to the continued funding the Saudi Islamic fundamentalist who churn out suicide terrorists and execute illiterate women for witchcraft.
GS650G & yankinwaoz :
Don’t confuse Dubhai with Saudi Arabia. It’s a pretty laid-back type of Islam over there, and you’ll readily find alcohol. They are traders more than fundamentalists, and at least as smart as Americans (who have their own fair share of natural resources to start with).
Oh, and Iranians may want missiles, but are no more likely to use them than the U.S. They want their guarantees that the U.S. army is not going to barge in and change regime on a whim, like they did in a certain neighbouring country. It’s self-preservation, just like the U.S. and the USSR did during the cold war.
Underestimating rising countries like those is what put the U.S. in trouble, and it’ll get worse before it gets better.
Yankinwaoz: true for Saudi Arabia, if not for the U.A.E.
The real value of this article is as an antidote to the widely held idea that profits get stored like the currency and coin in Unca Scrooge’s money vault.
It still ain’t America.
I love Dubai. Nowhere is wealth more prominently featured (flaunted?) in everyday life.
The architecture is spectacular, the services catering to the wealthy overwhelming.
Sidenote: has anyone realized how much the Trump Dubai is copying the lines of the sail-inspired Burj al-Arab hotel, also in Dubai?
I know that KSA and UAE are as different as night at day. The article title doesn’t imply only UAE.
As far as I can tell, when I pull up to a pump I can not choose which ME nation’s gasoline I can buy. Outside of Citgo, which I knows goes into Comrade Chavez’s pocket, I can’t tell how much of my fuel bill ends up subsidizing KSA’s Islamic Fundamentalist and Radical Terrorists Inc. industry.
Well, there’s also Lukoil!
Nit-picking: I wasn’t aware that the Burj Dubai tower’s height had been finalized yet.
The best place to look at Dubai developments is skyscraperpage.com. they also have nice diagrams.
UAE is an interesting and dynamic place, its like if Las Vegas did a Saudi Arabian-themed casino. But they import everything they have, including their labor. The people of the Phillipines and Pakistan seem to be the folks actually throwing those towers up in the desert, and they are paid pennies on the dollar so-to-speak. It would be like the Mexican immigration problem with the USA, but imagine the USA as something more akin to Jamaica relative to Mexico in scale, and the depths of the impending demographic time-bomb slowly ticking away in that place are apparent.
Also, Iran is a problem. Everyone says the USA is a big kind of bully country taking over Iraq for instance, but the reason the Iranian regime is not as (actually far more) rapacious is more a question of capability instead of morality. If Pat Robertsen was President, and the 700 Club ran both houses of Congress, then you get an idea of what Iran would be like if Iran had the same physical capacity as the USA. I was there last year, and I tell you, the locals are scared shitless of the Iranians long before they are scared much at all of the Americans, they’re just pissed at us, not scared.
Another thing to remember is all our petro-dollars aren’t as much as we think. We have been good at hiding inflation domestically, by exporting all our printed money overseas in the form of budget and trade deficits; but the rest the world knows the Xerox-more-money gig is up, which is why the dollar is bleeding to the Euro so much. Oil price-per-barrel rise has been extreme measured in dollars for the past four years, but nothing like that increase has been seen if the same barrel is priced in Euros over the same time-frame.
think of Iranians as middle eastern texans
As pro-American as I am, I can’t blame Chavez for screwing Exxon. He’s the closest thing to Robin Hood that the world has today. Everyone knows that Exxon has been propping up warlords for decades in exchange for cheap oil access rights. Too bad for them if Chavez doesn’t want to take their bribes.
Not to defend Chavez’s outlandish style, but undoing 200+ years of colonialism and petro-corruption in order to feed the poor seems more honorable than helping fund taller skyscrapers and enormous theme parks in Dubai.
OK, let’s review and see if I correctly understand some of the comments:
– The mullahs who run Iran are only interested in self-defense, because the US Army will invade on a “whim”;
– If Pat Robinson became President and the 700 Club ran Congress, then the US would be just like Iran, a place where gays, apostates and adulterers are publicly executed and terrorism is a major export; and
– Exxon (i.e., its shareholders) deserves to have property expropriated because it tried to bribe Chavez and because Venezuela suffered from over 200 years of colonialism before 1830.
Strange, isn’t it, that millions around the globe would jump at the chance to move to America.
Moto- I agree with you. I mean, just look at those election`s candidates. Like Hillary, she has got so much money, she is so rich, yet she never stops. She can`t find an amount of money that would let her say-enough. Just more and more. She wouldn`t stop and say, i might give my money to people who actually need it, or say, I am old enough, I should devote more time for my family, I should find an interesting hobby. And so the life goes on. The loneliness is fulfilled with making more money, and pretending that everything is fine. One day she will wake up asking, how come that life has gone so fast. It`s because you have been running it with an afterburner in your ass, that`s why! Somehow I notice that the amount of wealth and money we increase is proportionate to loneliness we create. We look at the boys in yard playing football, and they don`t have David Beckham -like contracts, yet they play it with passion. they can share a candy, a smile, a pat without expecting anything back. Yet we can`t move a finger without an invitation from a greenback. Ditto the Exxon. They never have enough……
I imagine their CEOs, fat, bald, wrinkled with the latest gadgets and cars, and a private jet, and an island and chicks on their laps sipping screwdrivers , yet they know themselves that all of this gives less passion and joy than even a single new bike that their daddy gave them in the childhood as a gift on birthday or a new fish aquarium, or a single fishing tour with your best schoolfriend.They are tired, so tired, they even are too tired to cry and to sorry themselves, they just sigh in hopelessness and go on….making their next millions.
jurisb:
“Rosebud…”
Anyway, it’s nice to see someone “reaching for the sky”, but it’s unknown whether Dubai’s secular hubris will attract the sort of fundamentalist retribution similar to 9/11.
I wouldn’t sleep easy in one of their sky-piercing spires…
Dubai our oil, please?
jurisb> I think that’s the best post I’ve ever read by you and I couldn’t agree more. Nice. :)