oil production and refining have controlled Bahrain’s economy. Natural gas occurs along with the crude oil and comes out of the same wells. For a long time, the gas from the wells was allowed to escape into the air. In 1979 the government set up a company to collect and process the natural gas into propane, butane, and naphtha. Depletion of Bahrain’s limited oil reserves has prompted efforts to develop other industries. For example, in the 1970s the government accomplished Aluminum Bahrain (ALBA); aluminum smelting remains an valuable industry. In a further effort at diversification, the government has promoted tourism.

Manufacturing is growing in importance as the government strives to diversify in the face of dwindling petroleum reserves; together with utilities, manufacturing employs about one-tenth of the labour force. The principal nonpetroleum industrial products include aluminum (from a smelter set up in the early 1970s) and various aluminum products, tiles and cement blocks, plastics, asphalt, paper products, wheat flour, and soft drinks. Major ship-repair yards are located at Mina' Salman, near Manama, and on Al-'Azl Island. All of the nation's electrical energy is produced by thermal-power plants.

In Bahrain, petroleum production and refining account for about 60% of export receipts, 60% of government revenues, and 30% of GDP. With its highly developed communication and transport facilities, Bahrain is home to numerous multinational firms with business in the Gulf. Bahrain is dependent on Saudi Arabia for oil revenue granted as aid. A large share of exports consists of petroleum products made from imported crude. Construction proceeds on several major industrial projects. Unemployment, particularly among the young, and the depletion of both oil and underground water resources are major long-term economic problems.