Boom in oil price fuels construction frenzy in Dubai

DUBAI, United Arab Emirates - Snow skiing in the desert? Sure. The world’s largest shopping mall and the earth’s tallest building? Build them. An under- sea luxury hotel? Why not?

Nothing seems impossible these days in this desert kingdom on the north coast of Arabia.

The biggest oil-price boom of a generation is under way, proving wildly wrong predictions by the U.S. Department of Energy last year that oil prices would decline to $23.57 a barrel.

Prices hit all-time highs of $57.70 per barrel in New York on Friday, and some analysts said prices could rise as high as $105 per barrel. The price closed Friday at $57.27, also an all-time high.

Analysts predicted that regular self-serve gasoline would cost more than $2.25 per gallon within weeks and reach $2.40 by Memorial Day.

Every time motorists fill up at more than $2 a gallon in the United States, the swishing sound you hear in this desert kingdom is billions of fresh petrodollars pouring in. Oil profits are being spent with such relish that Dubai’s economy grew last year at a rate of 16.7 percent, compared with U.S. growth of 4.4 percent and China’s 9 percent.

It’s not just Dubai that is being transformed by the world’s — especially China and India’s — thirst for oil.

Petrodollars are helping repair Russia’s tattered economy and giving President Vladimir Putin an excuse to avoid needed reforms, plus a way to revive Moscow’s influence on the global stage.

In Venezuela, President Hugo Chavez is using the oil bonanza to beef up his military, thumb his nose at Washington and polish his populist credentials with giveaways to a restive population.

But it’s Dubai’s freewheeling economic vision — and lack of any democratic opposition — that has proved a magnet for investments by the newly wealthy oil rich.

“We don’t bother ourselves with politics, and you don’t hear people talking about politics here. In the coffee shops and restaurants and shopping malls, all they’re talking about is making money,” said Ali Ibrahim Mohamed, a top official in Dubai’s department of economic development.

There was a time when oil barons of the Middle East invested much of their newfound wealth in the United States. But that was before September 11, 2001, and their fears of an American backlash toward the Arab Middle East. Since then, they have kept their money closer to home.

Now flush with cash from the latest oil bonanza, they are sinking huge sums into a round-the-clock construction frenzy that has transformed Dubai, a once-quaint port of pearl divers and gold traders, into a high-tech capitalist dynamo that combines Singapore, Disney World and Oz.

In its drive to create an international business center and deluxe tourist destination, Dubai already boasts the five-year-old Burj Al Arab — the world’s tallest hotel, at 1,053 feet — taller than the Eiffel Tower and only about 200 feet shorter than the Empire State Building.

Not to be outdone, the neighboring sheikdom of Abu Dhabi just opened the 1.18 million-square-foot Emirates Palace Hotel at an estimated cost of $2.8 billion. It took 20,000 workers laboring day and night three years to complete it.

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