Could the mushrooming Dubai debt crisis be a preview of what peak oil will produce among the oil-selling nations?
Dubai--meaning the few poweful men in control--launched itself on a campaign to become the combo Las Vegas, Miami and Wall Street of the Mideast. That meant huge construction projects and rampant purchasing of key properties across the globe. A large portion of the action in Dubai is run by sovereign firms, belonging primarily to the Dubai government and its leaders. However, they've borrowed up to $60-billion from all over the globe. Stock markets today tanked when the story broke: no interest payments for six months from one arm of Dubai World.
Perhpas you recell the cause celebre in Washington when Dubai bought a British company that controlled a slew of American ports? Eventually the Dubai sovereign company sold its U.S. ports to the All-American patriots over at AIG. And we all know how good AIG has been to Americans.
Why would tiny Dubai start grasping and reaching for a different future? Because they know their oil is running out and they don't wish to go back to living like nomads or sailing little wooden boats around the Persian Gulf. Of course, now it appears their investment plans looked better in theory than in practice. Courtesy Dubai Palm Islands.
ANOTHER WAY? THE NOR-WAY
Another major oil exporter has taken a far different approach to its excessive oil income and the eventual end of its oil reserves. Norway now has the second largest sovereign investment fund in the world, behind only Abu Dhabi. Yes, tiny Norway ahead of China and Saudi Arabia.
The streets in Norway are not paved with gold, but they are all well-paved. Every resident is covered. Health insurance, check. Lifetime pension, check. Universal child support, check. One-year paid maternity leave, check. Sick pay for ALL jobs, check. No university tuition, check. What an American news service derides as cradle-to-grave welfare.
Knowing oil pretty well, Norway has invested in potential and working oil fields from Kurdistan to Angola. They've known the Norwegian oil supply is limited and they began years ago to invest in alternative energy. They did not build a large palm-shaped island like Dubai, however.
Wherever it leads this Dubai story will re-heat the debate over who's right or wrong on the amount of oil left. I recently blogged about accusations that the IEA has been cooking the books to keep American oil interests comfy.