The economy of Middle East is practically synonymous with crude oil for the average Western observer, but what most people aren’t aware of is the Middle East hasn’t been doing so well out of its crude oil reserves in recent years. So much so, that it may be the first time in history that we can justifiably declare an imminent state of Peak Oil in these regions.
It is an understandably bold statement, and one that will come as a surprise to many… especially those who have been blindsided by the more general, global statistics. Besides a slight dip over the course of 2013, it appears that crude oil production around the world is in on an upward trend, and peak oil doesn’t seem to be on this side of the horizon.
But there’s a reason why production looks so healthy, and it isn’t anything to do with the Middle East region. If we exclude North America from the statistics, we’re left with a much bleaker picture.It is clear that it is only the U.S. and Canada who are bolstering production figures for the rest of the world. Everywhere else is seeing a sharp decline – and likely prolonged – decline.
Worse, even North America seems to be suffering once you dig into the details; their own upswing rests solely upon shale reserves, a sub-set of oil production that is becoming increasingly hard to recover in way that is economically viable. This is why less than 30% of shale operations take place outside of America and Canada, since they have almost exclusive access to the specialized rigs required to obtain shale oil.
Flow Reversal
Last month, BP were given the all-clear to commence drilling for shale gas in Oman (which set them back a startling $16 billion dollars for the contract). Other than this, however, most of the fossil fuel action now seems to be flowing out of America rather than towards it, and it’s highly likely that the U.S. and Canada will begin to export its excess oil to regions that, historically, used to produce it themselves. The shale boom has already crippled the European refineries, and West African suppliers are suffering a similar fate.
Given that the Middle East region is also in the firing line, what can be done to mitigate this, or at least lessen the dependency on crude oil?
United Arab Emirates is arguably just as famous for its oil as it is as pioneers of green technology. Cities such as Abu Dhabi (and Masdar City in particular) are well known for their greenery, advanced architecture, eco initiatives and focus on carbon-neutral municipal planning.
Great advances have been made already in these ‘green cities of the future’, and further innovations would be welcome. Improved water recycling or an increase in roof gardens are all areas which could drive things ever forward.
Dubai Wasn’t Built in a Day
As well as focusing on how to reduce waste and better use the resources we do have, it should also be remembered that many countries in the Middle East weren’t exclusively built on oil.
For instance, it’s a common misconception that Dubai’s great wealth came from the black gold; while the towering metropolis of today is markedly different from the settlement that has stood their since antiquity, it has blossomed for thousands of years as a prime location for trade. While oil has undeniably played its part, less than 7% of the emirate’s revenues actually come from oil and gas.
Dubai is a good example in that it has recognized the need for diversification in recent years. It remains a global hub for trade – accounting for 16% of its revenue – and has recently established itself as a huge market for real estate, construction and tourism. A good move on Dubai’s part, really, since its oil is expected to run out in the near future.
Ultimately, the answer seems to fall somewhere between Abu Dhabi’s focus on alternative energies and Dubai’s focus on different revenue streams. What is clear, however, is that focusing solely on chasing down the last barrel of oil is not a foolish move economically, but one which is will short-change our environment in the process.
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