Introduction to Gulf Cooperation Council…and oil profits

This morning on the local radio talk show, Doug Wright introduced me to the Gulf Cooperation Council, or GCC as it’s called. Basically GCC is the collective economies of Saudi Arabia, Kuwait, United Arab Emirates, Oman, Bahrain, and Qatar. The thing that caught my attention is when I learned that the GCC will generate 40 percent of the world’s oil exports, resulting in approximately $500 billion for the GCC states.

This information was highlighted in an article in the Desert News written by Kevin G. Hall for McClatchy Newspapers. Mr. Hall pulled his information from a report published August 15th, 2006 by The Institute of International Finance (IIF) — see press release for summary.

In full disclosure, the report points out that these large profits in times of plenty result in an influx of investment here in the United States and other economies. However, after reading these articles tonight, I couldn’t help but think of two questions:

ONE: How much money is going into the War on Terror from the regional economies of the GCC? As Mr. Hall points out, the $10B losses in Lebanon from the Israel and Hezbulah is ONLY TWO PERCENT of the total profits from this year’s profits.

From article in the Desert News:
“Consider that the damage to Lebanon’s infrastructure and economy in general after a monthlong conflict with Israel is broadly estimated at about $10 billion. That’s about 2 percent of the GCC nations’ projected oil earnings for this year. Their oil earnings are greater than the combined export earnings of the developing economies of India, Brazil, Poland and Turkey.”

TWO: When will Congress, President Bush, and we as American citizens realize that our insatiable appetite for oil? What will it take to drive us to innovate alternative energy sources? When will we be able to capitalize on world-wide economic demand that we can use for core infrastructure investment?

From the IIF press release announcing GCC summary report:
‘IIF Managing Director Charles Dallara stated, “The oil windfall has supported increased government spending, and lifted domestic confidence, resulting in an investment boom. Projects worth over $1 trillion, mostly in infrastructure, are either under way or planned which aim to diversify the economic base and generate greater value added from hydrocarbons.”‘

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