new city of hype

I don’t know whether to laugh or cry: Dubai is back. After years of stalled cranes and worthy road projects inching forward under a burden of debt, we are back in the land of underwater hotels and ski slopes in the desert. This time:

“Taj Arabia, a replica of the 360-year-old marble mausoleum, will be about four times the size of the original”, according to the Gulf News. It will feature “a five-star hotel property with 300 rooms…flanked by seven mixed use buildings, two of which will have 200 serviced apartments”, and will serve as “the world’s grandest wedding destination.” And lest this infant Taj-on-steroids feel lonely in its desert home, it will have a posse of celebrity hangers-on to keep it company:  “several historical and modern icons of architecture from around the world such as the Pyramids, Hanging Gardens, Eiffel Tower, Taj Mahal, Great Wall of China, and Leaning Tower of Pisa.” Naturally, “Bollywood producers have shown interest in using Taj Arabia as a backdrop”.

Now how are they going to air condition all that? Did anybody mention sustainability, or the coming energy crunch? The shimmering bubble drifts on…

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8 Responses to new city of hype

  1. Allison Rossiter says:

    Loved this, duck!

    xoxoxo mg

    ________________________________

  2. I’ll read them when my brain comes back online….

    What’s your take on the shale gas boom? People in Poland are understandably excited…

    http://www.worldpolicy.org/blog/2012/09/20/how-poland’s-shale-gas-will-transform-europe

    http://online.wsj.com/article/SB10000872396390443866404577565244220252020.html

  3. markrossiter says:

    not all it’s fracked up to be. In the big picture, extracting from shale is certainly not a game-changer; it’s actually more scraping the barrel. In the old days (and still in the big fields of the Gulf) oil and gas used to come out of the ground in gushers, with energy return on energy investment of up to 100-1. If there was any more of that stuff left to exploit, they wouldn’t be going to the bother of using a highly water-chemical-and-energy intensive process to wring energy from the shales. Energy return on energy invested for shale is (if I recall correctly) in single figures when it’s at its best, and it has astonishing depletion rates – in the US, a well that produces x amount on day one will typically, within a year, be producing easily less than 10% of that amount. Nevertheless, they have punctured Pennsylvania and North Dakota full enough of holes that enough has been extracted to collapse the price of gas, though this may be happening because producers are locked into contracts whereby they are condemned to go on producing even when they are losing money (largely because their over-production has collapsed the price of gas…)

    With shale oil, there is little doubt that it has made quite a difference in US production, in that what has been on a downward curve since 1970, with the exception of an upward bump when Alaska started getting exploited in the 1980s, has had another uptick in the last few years, though it is still nowhere near where it was 40 years ago (and never going back there). That, combined with falling US petrol consumption (from a much higher peak than in Europe) is I think a big reason why the US has weathered the last four years relatively better economically than most of Europe.

    Recoverable reserves, on which a lot of the hype is based (how many Saudi Arabias worth?) are a fairly elastic concept, both by definition and over time. Technically, yes you could recover gazillions of BTUs from the shales, but financially it wouldn’t make sense – in order to recover beyond a certain point you would have to put more energy in than you were getting out! So the reserve figures are not necessarily all that meaningful – and certainly in the US they are constantly being revised downward.

    Having said that, I think at least certain people in Poland are probably right to be excited, especially if you have land under which companies want to extract (or try to) and you can sell it at an inflated price. No doubt quite a few people will get rich on this over the next few years, while the boom lasts, and others will do well if they have skills that they can market in the actual extraction or in the service industries around it (my brother-in-law has done pretty well out of driving a tanker rig in North Dakota). On the other hand, there will never be anywhere near as much production as there is from regular gas fields (like North Sea, Russia, Qatar), so it is unlikely to transform Poland’s fortunes as a whole (in the way that oil has done for the GCC), though no doubt it will make national life a little more comfortable. Having said that, there is a fair question over the quality (and hence marketability) of the gas extracted, and on top of that there are horrendous ecological consequences: there are tales aplenty from Pennsylvania and New York state of horribly contaminated groundwater, people finding flammable gas coming out of their kitchen taps instead of water, and even (from Lancashire) of fracking causing earthquakes.

    For an enjoyable if dismissive take on the whole thing (especially in the US context), see Dmitry Orlov: http://cluborlov.blogspot.com/2012/05/shale-gas-view-from-russia.html

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