Skyrocketing oil and natural gas prices in the second quarter of this year led ExxonMobil to report the highest profit ever by an American company. In spite of falling production and rising operating costs, Exxon brought in a 138 billion dollars in revenue and reported an astounding net income of 11.7 billion dollars.
I've spent several hours listening to experts on various business shows on television trying to explain why oil prices keep rising and the relationship between a depreciated dollar and oil prices, Peak Oil, and so on. I'm not an oil expert but why is it that whenever the U.S. rattles the saber towards Iran, oil prices jump a notch or two? And who is profiting from all of this?
Meanwhile, ExxonMobil and its stakeholders are not the only ones profiting from this petro-bonanza. Oil producing countries in the Middle East are swimming with cash and they're spending most of it on construction.
At a time when U.S. banks and financial institutions are in the midst of the worst housing market in the U.S. since the Great Depression, financial institutions in the Middle East are prospering due to ongoing construction frenzy. This boom is most obvious in Dubai, in the United Arab Emirates, but it is also visible in most of the Arabian Gulf states such as Abu Dhabi, Bahrain, Kuwait, Qatar, and Saudi Arabia. According to a construction expert, "more than 1/3 of the cranes in the world are located in that region."
Despite this petro-bonanza, many construction companies in the Arabian Gulf are exploiting foreign laborers, mostly from South Asian countries such as India, Pakistan and Bangladesh. To keep up with this construction boom, foreign workers report exploitative working conditions, such as forced confinement, nonpayment of wages, denial of food, and excessive working hours with no rest days.
Over the past few days, more than 1,000 Bangladeshis have been deported from Kuwait, and hundreds more face a similar fate due to a recent strike staged by Asian foreign workers in Kuwait to demand better pay and working conditions.
The strike in this major oil exporting Gulf Arab state, and a major U.S. ally I must add, came against a backdrop of soaring inflation and high prices. Workers have been complaining that they couldn't survive on their salaries once labor agents took their cut or unscrupulous employers deducted housing, medical and meal costs. Some Bangladeshis returning to their countries last week said they had been beaten and kept in appalling conditions after being accused of taking part in the protests.
As a side note, I read in the British press that a rich Qatari sent his Lamborghini on a 6,500-mile round trip to Britain for a service. The $ 400,000 supercar was put on a scheduled flight from Qatar to Heathrow - then flown back after the oil check.
This made me one wonder if we're just going through a phase...the era of the "haves," and the "have-nots" of oil.