Last Christmas, myself and hundreds of millennials snagged incredibly cheap flights to Abu Dhabi, an “emirate” (or city) of the United Arab Emirates (UAE) flying Etihad Airways. The ticket price made news as fares to the Middle Eastern country posted and sold for a mere $210 for one roundtrip ticket from New York or Washington, DC to the desert country. The airline acknowledged the mistake, but honored the tickets.
I’ve had the good fortune of traveling to a couple places in 2015. I went to Puerto Rico for the first time in March, then to Jamaica and now to the emirates of Dubai and Abu Dhabi. There are many things to be said about the value of traveling. But one thing I’ve found most important about traveling is its power to expand your perspective and understanding of other cultures as well as your own. This trip was no different and I indeed learned an incredible amount about the UAE’s culture and their economy.
The group I traveled with did most all of the touristy stuff. We went to incredibly glitzy shopping malls. We traveled out the desert to ride ATVs, eat lamb and ride camels. Some visited the breath taking Grand Mosque and our group chartered a small yacht like boat to party on. We visited the Burj Kahlifa (the tallest building in the world) and rode by the only hotel known in the world to have a seven star rating, the Burj Al Arab.
It was an incredible trip. I feel like I gained a great deal of knowledge about Middle Eastern, Muslim countries and about the subtleties of their day-to-day lives. But one thing kept bothering me.
In the specific areas we toured, we saw countless Bentleys, Ferraris and Lamborghinis. I even saw a Mercedes Pullman, (which I indeed had Googled only a week before. Drake truly can see the future with his lyrics). The malls had every luxury brand you can think of. The city streets were so clean it began to feel like a practical joke and we only saw two police cars the entire six days we were in town. We rode the hour-long trip (one-way) back and forth between Dubai and Abu Dhabi a number of times. As we rode in our private taxi cab, I kept wondering to myself, “Where are all the native working people? Where do people born in Dubai or Abu Dhabi actually work and what do they do?”
It was a weird thing to see. Luxury buildings, cars, purses and shoes, worn by apparent UAE natives, but a working class that at times seemed primarily composed of people from other countries like the Philippines, India and Europe. No place of such grand appearance sustains without a “working class” and for the life of me, I couldn’t figure out who the native, working class people were and where they might show up on a day-to-day basis.
On our last night in Dubai, I rushed to the information source every 9th grade teacher in 2001 said was not an acceptable source for history reports, Wikipedia and searched “Economy of the United Arab Emirates”. What I learned was shocking:
More than 85% of the UAE's economy was based on the oil exports in 2009.
In 2011, oil exports accounted for 77% of the UAE's state budget.
The UAE is working hard to diversify its economic drivers pivoting to tourism, construction, manufacturing and the services industry.
That evening I spoke to my good friend and his business partner. The business partner has a son, whose girlfriend is a native of the UAE. He told me that being a native of the country, she has a job that pays for her house and nets her a salary of $150,000 a year. She apparently describes her work as “pushing papers” and says she hates it. This young woman’s birth inside the country (apparently) entitles her to a well paying job and low/no expenses. Using her as a representative sample of the entire native population, it makes more sense why I saw Lamborghinis and Bentley’s with the same frequency you might see a Toyata Rav 4 in the U.S. It would seem the UAE has used its oil wealth to invest in the comfort and security of its native citizenry.
But still, it left me wondering: What happens if oil, some day soon, becomes obsolete? Dubai has apparently already suffered the financial blow of the low price per barrel of crude oil now and in the past. So what will happen if and when there is near zero demand for oil in the future? What will happen to the nation’s luxury and exotic car population?
The United Arab Emirates and other oil rich countries may have created an economic and societal quagmire, one of which I’d never previously been exposed to. So long as oil remains the primary economic driver, the UAE and countries like them will continue to succeed and drive Bentleys.
But if oil is someday overcome by a new “energy source”, their entire way of life could crumble.
Ben Carter is the Host of Manage Your Damn Money and author of Fictitious Financial Fairytale: A Completely Untrue Story About Money, Friends and Moscow Mules.