The Middle East’s Problem With Conspicuous Consumption

January 28, 2014 by  
Filed under Wind Energy Tips

Dubai, and its Mideast neighbors, are expanding, and demand for fuel is soaring. 
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News that the United Arab Emirates is considering tapping North America’s natural-gas glut for its domestic needs, has been hailed as one of the most striking repercussions of the U.S. resource bonanza.

The U.A.E., a Gulf OPEC oil producer, is the world’s 17th largest producer of natural gas but behind those statistics lie a tale of rampant domestic consumption there and in the immediate region.

The Middle East has long been seen as the world’s fueling station. Its oil and gas—the latter mostly from Qatar’s bounteous fields—has been shipped out to North America, Europe and Asia to satisfy the needs of consumers and industry alike.

But demand for fuel is soaring at home as populations grow, the region urbanizes (check out these then and now pictures of Dubai that show the extent of change in the past 50 years) and energy-intensive desalination is required to deliver potable water.

Saudi Arabia, the U.A.E., Kuwait, Oman, Qatar and Bahrain now consume as much oil as Indonesia and Japan combined, and demand has been growing at an average 6% a year over the last decade, according to the Middle East Economic Survey.

This is providing a headache for the governments of those countries, whose balance sheets rely heavily on export revenues that, in turn, allow for extensive fuel subsidies. Any changes to these policies have in the past been met with fierce public disapproval, which is possibly a reason why the U.A.E. would first look at reducing subsidies for expatriates.

In the short term, it may make sense for the region to look at the potential for North American gas. Further out, the region has to get a handle on its conspicuous energy consumption.

Adnan Z. Amin, director-general of the International Renewable Energy Agency, told The Wall Street Journal’s Summer Said that he is confident a regional push toward greater use of renewables will bear fruit. The U.A.E. and Saudi Arabia have plans to invest $1.5 billion in solar energy by the end of 2014.

Nuclear power is also on the agenda. The U.A.E. has signed off on a deal to build four commercial nuclear power reactors by 2020; Saudi Arabia plans 16 reactors over the next 20 years.

So while OPEC’s Secretary-General Abdalla Salem el-Badri issues his regular platitudinous utterances about how the producer group can easily cope with returning Iranian barrels and the potential for far higher Iraqi output, at home policy makers are wrestling not with a surplus of resources, but with not enough.


Crude oil prices recovered Tuesday from declines in the previous session that were linked to the currency pressures being felt in emerging markets. You can read the Journal’s latest oil-markets report here.

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