Welcome to Boomtown: Britain's new capital of bling

It is morning in Rubislaw Den, Aberdeen's most prosperous neighbourhood. The sumptuous, granite-faced villas erected by the Victorian shipbuilders and mill barons who made this corner of Scotland rich more than a century ago, rise up and down the tree-lined streets. In the surrounding parkland, deer graze and kingfishers swoop. All is quiet, apart from the occasional crunch of tyres on gravel as Bentleys and Lamborghinis bearing personalised number plates slip out of double-gated driveways to convey their owners to work, or ferry spouses to another day of retail therapy in the city centre.

It might stick in the craw of those living elsewhere in the UK to see wealth being so conspicuously flaunted in Aberdeen's West End – battling as they are to cope with a 35 per cent hike in gas bills or the cost of filling a fuel tank – but here, in the backyard of Europe's high-powered oil and gas executives, the latest round of soaring world energy prices are helping the industry reap rewards unseen since the boom days of the 1970s.

Back then when Abba Gold topped the charts for the first time, Aberdeen enjoyed an oil boom that saw billions of pounds pour into the city. The good times rolled for more than a decade, but then, as the price of oil slumped to just $10 a barrel in the 1990s, thousands of ex-pats quit the city and fears grew for its future.

But all that has changed.

Brent Crude is now trading at the once-unimaginable figure of $120 a barrel. This unexpected turn of fortune has earned Aberdeen a new tag. No longer the dour old Granite City, it's now being hailed as a designer-clad bonanza town – the City the Credit Crunch Forgot.

Lynn Turner is typical of Rubislaw Den residents. She is standing on the corner of the road wearing outsized sunglasses and an expensive-looking tracksuit as she waits for her two young children – pupils at the International School (which is host to children of some 36 different nationalities). A thoughtful and articulate woman, originally from California, she is, like almost everyone else around here, in Aberdeen for one reason: oil. Having traded in the sunshine of her native land for a region famously characterised by six months of winter followed by six months of bad weather, she says she is aware that higher costs are hurting people less fortunate than herself.

"People here have quite a lot of money, and I don't think the economic situation is externally affecting them," she says. "They may just have to choose a little more wisely, but they're still doing all the things they were doing before. It's more the working class folks who are having a hard time."

Oil and gas have bought rich benefits for the majority of Aberdonians. The unemployment rate is well below that of the Scottish average at just 0.8 per cent. Gross weekly earnings are, on average, £606 – a fifth higher than the rest of the country – and the recruitment centres have more jobs than applicants.

So febrile is the job market that graduates with just a year's experience are able to command salaries of £55,000. Engineers with 24 months under their belts might expect to pocket £120,000. The downturn in the construction industry has seen builders queue up to retrain as offshore divers, the most skilled of which are able to earn £1,000 a day.

And for those at the top end of the wealth scale, life is certainly good. It has entered into local folklore that Aberdeen is now the Bentley capital of the UK. The local Mercedes dealership is moving to premises three times larger, while Porsche and Land Rover garages, nestling in the shadow of Shell's brooding HQ – home to 2,500 staff – display row after row of luxury motors. The upmarket hotel chain Malmaison is hoping to open the latest addition to its empire in Aberdeen later this year.

Over at the city's harbour, chef Didier Dejean has been steadily building his international reputation since 1986, when he converted the old custom house into Aberdeen's best-known restaurant, Silver Darling.

Here, oil company staff and their guests think nothing of paying £21.50 for a dinner of roasted monkfish glazed with a Parma ham and Emmental crust, served with spring asparagus, crushed spring onions and potatoes and chorizo.

"There is no sign of a credit crunch yet," explains Mr Dejean who learnt his culinary skills in his native Millau, France. "There has been no problem. We are full here every night.

"I came here a little bit after the oil started. It has been up and down since then, but it is busier than ever now. If there are any people in the world who are happy at the moment, it's people who produce oil. This is the European capital of the oil industry. Companies like Shell, BP and Total, they all have money to spend," he says.

It is a similar story in the city centre, which is undergoing a major facelift. As well as a new £100m, 250-store shopping mall and a £13m contemporary arts centre designed by architects Brisac Gonzalez, a rash of chi-chi boutiques has also sprung up. Enjoying pride of place on Union Street, right next door to Hugo Boss, is Cruise, one of the UK's fastest-growing luxury retailers. If Harvey Nichols' decision to open a store in Leeds was seen as a turning point in that city's embrace of metropolitan mores, the same can be said of the arrival of Cruise in Aberdeen, with its clothes and accessories bearing the gilded names of Jimmy Choo, Marc Jacobs, Gucci and Dolce & Gabbana.

Cruise's customers last week included Phil Dixon and his partner, Claire Fraser, both of whom work in the oil industry. Mr Dixon was the proud new owner of a pair of £185 Y3 trainers. They were busy enjoying the good times while they lasted. "I can't say we are feeling the credit crunch personally," he says a little sheepishly, before adding: "Ask me again in a few months, the answer could be different."

Cruise, which opened its doors in October last year, says it chose Aberdeen because it was already firmly established as a "vibrant, cosmopolitan city". It has eight other branches, including shops in Harrogate, Nottingham, Glasgow and Chester. Spokeswoman Emma Plazalska says sales in Aberdeen have exceeded already high expectations. "We've had a phenomenal response to the store since opening, reflecting the demand for luxury fashion products in the city," she says.

But the taste for the high life extends beyond mere handbags and shoes for the city's oil rich.

At Oddbins on Bon Accord Street they are offering six bottles of champagne for the price of five. Surely this is a sign that times are hard? Not at all, claimed one member of staff. "We sell an awful lot of champagne here," he says."A lot of people buy it as their evening tipple. There is no sign of trade drying up at the moment."

Across the other side of Union Street, local entrepreneur Mark Cavanagh, a former oil and gas consultant, opened his Fusion bar bistro just three months ago. The unique selling point is – what else? – a £200,000 black Bentley which brings customers to and from the restaurant. He drives a red Ferrari Spider, he admits, though only "at the weekend". "The bar is part of the healthy oil market. That's where my customers' disposable income comes from," he says.

Another businessman thanking the fickle god's of geology for Aberdeen's good fortune is Ryan Forbes of estate agents Re/Max. While his colleagues elsewhere are living in fear of redundancy and being asked to hand back the keys to their company Audi TTs, he is celebrating

"We are definitely bucking the trend," he says. "The oil market here is quite a significant part of this, but we are well placed with two universities as well, so people are still piling in to the buy-to-let sector."

Houses in Aberdeen's West End are pushing ever northwards of the £1m barrier, but the problem is not paying for them, it's finding them. "They only come up every now and again. There are still buyers out there and people are prepared to wait. There is a shortage of housing in Scotland so even if it does slow down it won't be for long, people always need somewhere to stay," Forbes says.

But can the good times really last for ever? One man who has seen such times before is Stewart Spence, who runs Aberdeen's five-star Marcliffe Hotel and Spa. It is situated in Pitfodels, deep in the heart of the AB15 postcode, an area said to boast the highest proportion of millionaires anywhere outside London. He thinks the rest of the country's travails will represent little more than a "blip" for the Granite City and expects no imminent shortage of local ladies happy to splash out £140 to sample a half-day "tranquillity experience" at his resort. "The past few years have been very good business for Aberdeen. It is not as bad here as it is in the rest of Scotland. We haven't noticed any difference once we get them through the door. They are still willing to spend the same amount of money," he says.

Someone else who believes that there is gold in them hills, as well as black gold in them seas, is the American tycoon Donald Trump. His plans for a £1bn international golf course at Balmedie, near Aberdeen, look almost certain to be approved despite environmental opposition.

It may be an apocryphal tale, but legend has it that 10 years ago, when the good times looked like they had gone the way of the sliding oil price, the most popular car sticker in Aberdeen read: "Dear Lord, please let there be another oil boom. We promise not to piss it away this time." Today, it is claimed, a new sticker declares simply: "Thank God."

There are, of course, pessimists who say the oil fields that fuelled the past decades of wealth are – with peak oil an increasingly distant memory – literally half empty, not half full, and that Shell and BP cannot continue to post record-breaking multi-billion pound profits each quarter.

But according to Rita Stephen of Aberdeen City and Shire Economic Forum, the city and surrounding areas are far from being a one-trick pony and hasn't been since the days of Robert the Bruce.

"Historically, Aberdeen has always had a buoyant economy. In the 16th century we had two universities here when the whole of the rest of England only had two. It was and still is a knowledge-based economy."

The academic community in Aberdeen has already given the world its first iron lung, the MRI scanner and, only last week, new hope in the battle against Alzheimer's. There are more life scientists per head of population than anywhere else in Europe. "We are just keeping on doing what we have been doing for the past 500 years," she says.

She believes it is not just a question of having oil and gas in the ground, it has been the city's success in developing training and support services to the rest of the world's energy industry that will see it continue to flourish well into the next half of the century, continuing to create local tycoons such as Bob Keiller, now worth £600m after leading a management buyout of PSN from US giant Halliburton.

This link to the rest of the world means major energy projects such as those announced in Angola, Alaska, or even closer to home at East Breagh, look set to keep the credit crunch firmly at bay. For this reason pressure is mounting to reinstate the daily direct flight to the world's oil capital, Houston, while Aberdeen airport remains BAA's most-profitable possession and its heliport one of the busiest in the world.

Prime Minister Gordon Brown's promise to make the North Sea the Saudi Arabia of the renewable energy industry is therefore being keenly watched. Yet there is a note of caution. "No industry is immune from the credit crunch," Stephen says.

But for those already here, it is a question of enjoying life. Back at Rubislaw Den, a young Australian woman sitting behind the wheel of a Porsche Carrera 911 is heading out for a meeting. Winding down her electric windows, her eyes shielded from the weak Scottish sun by a pair of designer sunglasses, she admits that the subject of the credit crunch has started to creep into dinner party conversation, but no one is taking it too seriously... yet.

"People are talking about it. Everyone is aware of it, I suppose, but here in Aberdeen you are surrounded by people who work in the oil industry so it's not really feeling the pain yet."

Another, more elderly, neighbour is not so sure. "My husband has been talking about making savings so I might buy a fur coat to wear around the house – that will last me at least two winters," she says.