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A petrostate, oil state or petrocracy is a polity whose economy is heavily dependent on the extraction and export of
oil An oil is any nonpolar chemical substance that is composed primarily of hydrocarbons and is hydrophobic (does not mix with water) and lipophilic (mixes with other oils). Oils are usually flammable and surface active. Most oils are unsaturate ...
or
natural gas Natural gas (also fossil gas, methane gas, and gas) is a naturally occurring compound of gaseous hydrocarbons, primarily methane (95%), small amounts of higher alkanes, and traces of carbon dioxide and nitrogen, hydrogen sulfide and helium ...
. Petrostates are conventionally independent nations; however writers like Samuel Weston and Andrew Nikiforuk describes major oil-producing subnational entities like
Wyoming Wyoming ( ) is a landlocked U.S. state, state in the Mountain states, Mountain West subregion of the Western United States, Western United States. It borders Montana to the north and northwest, South Dakota and Nebraska to the east, Idaho t ...
,
Alberta Alberta is a Provinces and territories of Canada, province in Canada. It is a part of Western Canada and is one of the three Canadian Prairies, prairie provinces. Alberta is bordered by British Columbia to its west, Saskatchewan to its east, t ...
and
Louisiana Louisiana ( ; ; ) is a state in the Deep South and South Central regions of the United States. It borders Texas to the west, Arkansas to the north, and Mississippi to the east. Of the 50 U.S. states, it ranks 31st in area and 25 ...
as also petrostates. A petromonarchy or oil monarchy is a petrostate run by a dynastic absolute monarch; one run by another type of autocrat is a petro-dictatorship. The presence alone of large oil and gas industries does not define a petrostate: major oil producers that also have
diversified economies Diversification may refer to: Biology and agriculture * Genetic divergence, emergence of subpopulations that have accumulated independent genetic changes * Agricultural diversification involves the re-allocation of some of a farm's resources to n ...
are not classified as petrostates due to their ability to generate income from various industries and sectors beyond the oil industry. Petrostates typically have highly concentrated political and economic power, resting in the hands of an
elite In political and sociological theory, the elite (, from , to select or to sort out) are a small group of powerful or wealthy people who hold a disproportionate amount of wealth, privilege, political power, or skill in a group. Defined by the ...
, as well as unaccountable political institutions that are susceptible to
corruption Corruption is a form of dishonesty or a criminal offense that is undertaken by a person or an organization that is entrusted in a position of authority to acquire illicit benefits or abuse power for one's gain. Corruption may involve activities ...
.


Countries considered to be petrostates

Various countries have been identified as current or former petrostates: *
Algeria Algeria, officially the People's Democratic Republic of Algeria, is a country in the Maghreb region of North Africa. It is bordered to Algeria–Tunisia border, the northeast by Tunisia; to Algeria–Libya border, the east by Libya; to Alger ...
*
Angola Angola, officially the Republic of Angola, is a country on the west-Central Africa, central coast of Southern Africa. It is the second-largest Portuguese-speaking world, Portuguese-speaking (Lusophone) country in both total area and List of c ...
*
Azerbaijan Azerbaijan, officially the Republic of Azerbaijan, is a Boundaries between the continents, transcontinental and landlocked country at the boundary of West Asia and Eastern Europe. It is a part of the South Caucasus region and is bounded by ...
*
Brunei Brunei, officially Brunei Darussalam, is a country in Southeast Asia, situated on the northern coast of the island of Borneo. Apart from its coastline on the South China Sea, it is completely surrounded by the Malaysian state of Sarawak, with ...
*
Cameroon Cameroon, officially the Republic of Cameroon, is a country in Central Africa. It shares boundaries with Nigeria to the west and north, Chad to the northeast, the Central African Republic to the east, and Equatorial Guinea, Gabon, and the R ...
*
Chad Chad, officially the Republic of Chad, is a landlocked country at the crossroads of North Africa, North and Central Africa. It is bordered by Libya to Chad–Libya border, the north, Sudan to Chad–Sudan border, the east, the Central Afric ...
*
Ecuador Ecuador, officially the Republic of Ecuador, is a country in northwestern South America, bordered by Colombia on the north, Peru on the east and south, and the Pacific Ocean on the west. It also includes the Galápagos Province which contain ...
*
Equatorial Guinea Equatorial Guinea, officially the Republic of Equatorial Guinea, is a country on the west coast of Central Africa. It has an area of . Formerly the colony of Spanish Guinea, its post-independence name refers to its location both near the Equ ...
*
Guyana Guyana, officially the Co-operative Republic of Guyana, is a country on the northern coast of South America, part of the historic British West Indies. entry "Guyana" Georgetown, Guyana, Georgetown is the capital of Guyana and is also the co ...
*
Indonesia Indonesia, officially the Republic of Indonesia, is a country in Southeast Asia and Oceania, between the Indian Ocean, Indian and Pacific Ocean, Pacific oceans. Comprising over List of islands of Indonesia, 17,000 islands, including Sumatra, ...
*
Iran Iran, officially the Islamic Republic of Iran (IRI) and also known as Persia, is a country in West Asia. It borders Iraq to the west, Turkey, Azerbaijan, and Armenia to the northwest, the Caspian Sea to the north, Turkmenistan to the nort ...
*
Iraq Iraq, officially the Republic of Iraq, is a country in West Asia. It is bordered by Saudi Arabia to Iraq–Saudi Arabia border, the south, Turkey to Iraq–Turkey border, the north, Iran to Iran–Iraq border, the east, the Persian Gulf and ...
*
Kazakhstan Kazakhstan, officially the Republic of Kazakhstan, is a landlocked country primarily in Central Asia, with a European Kazakhstan, small portion in Eastern Europe. It borders Russia to the Kazakhstan–Russia border, north and west, China to th ...
*
Kuwait Kuwait, officially the State of Kuwait, is a country in West Asia and the geopolitical region known as the Middle East. It is situated in the northern edge of the Arabian Peninsula at the head of the Persian Gulf, bordering Iraq to Iraq–Kuwait ...
*
Libya Libya, officially the State of Libya, is a country in the Maghreb region of North Africa. It borders the Mediterranean Sea to the north, Egypt to Egypt–Libya border, the east, Sudan to Libya–Sudan border, the southeast, Chad to Chad–L ...
*
Mexico Mexico, officially the United Mexican States, is a country in North America. It is the northernmost country in Latin America, and borders the United States to the north, and Guatemala and Belize to the southeast; while having maritime boundar ...
*
Nigeria Nigeria, officially the Federal Republic of Nigeria, is a country in West Africa. It is situated between the Sahel to the north and the Gulf of Guinea in the Atlantic Ocean to the south. It covers an area of . With Demographics of Nigeria, ...
*
Norway Norway, officially the Kingdom of Norway, is a Nordic countries, Nordic country located on the Scandinavian Peninsula in Northern Europe. The remote Arctic island of Jan Mayen and the archipelago of Svalbard also form part of the Kingdom of ...
*
Oman Oman, officially the Sultanate of Oman, is a country located on the southeastern coast of the Arabian Peninsula in West Asia and the Middle East. It shares land borders with Saudi Arabia, the United Arab Emirates, and Yemen. Oman’s coastline ...
*
Qatar Qatar, officially the State of Qatar, is a country in West Asia. It occupies the Geography of Qatar, Qatar Peninsula on the northeastern coast of the Arabian Peninsula in the Middle East; it shares Qatar–Saudi Arabia border, its sole land b ...
*
Republic of the Congo The Republic of the Congo, also known as Congo-Brazzaville, the Congo Republic or simply the Congo (the last ambiguously also referring to the neighbouring Democratic Republic of the Congo), is a country located on the western coast of Central ...
*
Russia Russia, or the Russian Federation, is a country spanning Eastern Europe and North Asia. It is the list of countries and dependencies by area, largest country in the world, and extends across Time in Russia, eleven time zones, sharing Borders ...
*
Saudi Arabia Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in West Asia. Located in the centre of the Middle East, it covers the bulk of the Arabian Peninsula and has a land area of about , making it the List of Asian countries ...
*
Trinidad and Tobago Trinidad and Tobago, officially the Republic of Trinidad and Tobago, is the southernmost island country in the Caribbean, comprising the main islands of Trinidad and Tobago, along with several List of islands of Trinidad and Tobago, smaller i ...
*
Turkmenistan Turkmenistan is a landlocked country in Central Asia bordered by Kazakhstan to the northwest, Uzbekistan to the north, east and northeast, Afghanistan to the southeast, Iran to the south and southwest and the Caspian Sea to the west. Ash ...
*
United Arab Emirates The United Arab Emirates (UAE), or simply the Emirates, is a country in West Asia, in the Middle East, at the eastern end of the Arabian Peninsula. It is a Federal monarchy, federal elective monarchy made up of Emirates of the United Arab E ...
*
Uzbekistan , image_flag = Flag of Uzbekistan.svg , image_coat = Emblem of Uzbekistan.svg , symbol_type = Emblem of Uzbekistan, Emblem , national_anthem = "State Anthem of Uzbekistan, State Anthem of the Republ ...
*
Venezuela Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and many Federal Dependencies of Venezuela, islands and islets in the Caribbean Sea. It com ...


Economy

Petrostates rely on oil as a primary source of income, which can make their economies vulnerable to fluctuations in oil prices. When oil prices are high, they tend to thrive, but they can struggle during periods of low oil prices. The reliance on oil and natural gas may preclude the development of other industries, known as Dutch disease. Light industries, including textiles and clothing, are key factors that drive women to participate in the workforce. Petrostates thus often have lower rates of female workers, which can impede women's access to social and political freedoms. Petrostates are typified by weak economies, where products are more frequently imported than domestically produced. Diversification can successfully occur in limited circumstances, such as Mexico becoming part of the
North American Free Trade Agreement The North American Free Trade Agreement (, TLCAN; , ALÉNA), referred to colloquially in the Anglosphere as NAFTA, ( ) was an agreement signed by Canada, Mexico, and the United States that created a trilateral trade bloc in North America. The ...
, or
Dubai Dubai (Help:IPA/English, /duːˈbaɪ/ Help:Pronunciation respelling key, ''doo-BYE''; Modern Standard Arabic, Modern Standard Arabic: ; Emirati Arabic, Emirati Arabic: , Romanization of Arabic, romanized: Help:IPA/English, /diˈbej/) is the Lis ...
leveraging its location to become a hub of commerce and tourism. Most petrostates do not attempt economic diversification, instead seeking economic domination through large, state-owned oil companies.


Governance

Petrostates are characterised by an extreme abundance of
non-tax revenue Non-tax revenue or non-tax receipts are government revenue not generated from taxes. Examples # Rents, concessions, and royalties from private firms ## often from leases for developing natural resources on public land or fisheries in territor ...
and typically extremely low or often zero
direct tax Although the actual definitions vary between jurisdictions, in general, a direct tax is a tax imposed upon a person or property as distinct from a tax imposed upon a transaction, which is described as an indirect tax. There is a distinction betwee ...
es. This is because the extremely capital-intensive nature of oil and natural gas extraction means that negotiation between corporations and government is uniquely important to the development of these resources. Moreover, unlike direct taxes, oil revenue is amassed without developing networks with citizens. Petrostates, it is argued, depend upon their rentier dynamic and could not survive if they lose access to these rents. In some petrostates, leaders and governments may become more
authoritarian Authoritarianism is a political system characterized by the rejection of political plurality, the use of strong central power to preserve the political ''status quo'', and reductions in democracy, separation of powers, civil liberties, and ...
as they accumulate significant wealth and power through the control of the oil sector. They may use these resources to maintain political control, suppress opposition, and stifle democratic institutions. For example, Steven Fish identifies oil wealth as one of the major reasons for
Russia Russia, or the Russian Federation, is a country spanning Eastern Europe and North Asia. It is the list of countries and dependencies by area, largest country in the world, and extends across Time in Russia, eleven time zones, sharing Borders ...
's failed
democratization Democratization, or democratisation, is the structural government transition from an democratic transition, authoritarian government to a more democratic political regime, including substantive political changes moving in a democratic direction ...
. He explains that revenue from oil exports fueled corruption, and
corruption Corruption is a form of dishonesty or a criminal offense that is undertaken by a person or an organization that is entrusted in a position of authority to acquire illicit benefits or abuse power for one's gain. Corruption may involve activities ...
, in turn, hampered Russia's political liberalization. Furthermore, he notes that
Britain Britain most often refers to: * Great Britain, a large island comprising the countries of England, Scotland and Wales * The United Kingdom of Great Britain and Northern Ireland, a sovereign state in Europe comprising Great Britain and the north-eas ...
's and
Norway Norway, officially the Kingdom of Norway, is a Nordic countries, Nordic country located on the Scandinavian Peninsula in Northern Europe. The remote Arctic island of Jan Mayen and the archipelago of Svalbard also form part of the Kingdom of ...
's resource wealth did not lead to authoritarianism because "sturdy democratic regimes" were already in place. Similarly, Michael Ross argues that “the case of Russia since 1998 illustrates how oil revenues can endanger a weak democracy by boosting the popularity of an elected incumbent, who gradually removes checks and balances on their own authority”. In many petrostates, rulers invest in social welfare programs, including healthcare, education, and subsidies for essential goods. For example,
Kuwait Kuwait, officially the State of Kuwait, is a country in West Asia and the geopolitical region known as the Middle East. It is situated in the northern edge of the Arabian Peninsula at the head of the Persian Gulf, bordering Iraq to Iraq–Kuwait ...
,
Saudi Arabia Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in West Asia. Located in the centre of the Middle East, it covers the bulk of the Arabian Peninsula and has a land area of about , making it the List of Asian countries ...
,
United Arab Emirates The United Arab Emirates (UAE), or simply the Emirates, is a country in West Asia, in the Middle East, at the eastern end of the Arabian Peninsula. It is a Federal monarchy, federal elective monarchy made up of Emirates of the United Arab E ...
, and
Qatar Qatar, officially the State of Qatar, is a country in West Asia. It occupies the Geography of Qatar, Qatar Peninsula on the northeastern coast of the Arabian Peninsula in the Middle East; it shares Qatar–Saudi Arabia border, its sole land b ...
have invested in education, healthcare, and public amenities to improve the quality of life for their citizens.


International influence

Successful, stable democracies are the worst possible outcome for authoritarian petrostates, since they are potentially less subservient to the extremely wealthy petrostate rulers and could inspire similar examples elsewhere including within the petrostates themselves. Petrostate wealth may thus contribute to international
democratic backsliding Democratic backsliding or autocratization is a process of regime change toward autocracy in which the exercise of political power becomes more arbitrary and repressive. The process typically restricts the space for public contest and politi ...
: when stable authoritarian regimes within their sphere of influence become unviable, the oil states either support even autocratic rulers not otherwise allied with them, or allow or even encourage the nations in question to collapse into permanent conflict.
Remittance A remittance is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. Money sent home by migrants competes ...
s from petrostates may also stabilise autocratic regimes in nations whose citizens provide cheap expatriate labour. These remittances can be captured as
indirect tax An indirect tax (such as a sales tax, per unit tax, value-added tax (VAT), excise tax, consumption tax, or tariff) is a tax that is levied upon goods and services before they reach the customer who ultimately pays the indirect tax as a part of ...
es by governments otherwise extremely short of capital, and allow the ruling elites of the labour-supplying countries cheaper
consumer goods A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike an intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good. W ...
. Authoritarian petrostates are also known to be models of governance for right-wing populist rulers like
Donald Trump Donald John Trump (born June 14, 1946) is an American politician, media personality, and businessman who is the 47th president of the United States. A member of the Republican Party (United States), Republican Party, he served as the 45 ...
, and for wealthy corporations seeking a system of rule without taxes or democracy.


Resource curse

Global energy prices can cause turbulent and unpredictable swings in a petrostate's economy. Undiversified reliance on oil and gas industries can cause political and economic crises when the
price of oil The price of oil, or the oil price, generally refers to the spot price of a barrel () of benchmark crude oil—a reference price for buyers and sellers of crude oil such as West Texas Intermediate (WTI), Brent Crude, Dubai Crude, OPEC ...
drops. Over-investment in these industries at the expense of other sectors, such as manufacturing and agriculture, can hurt economic growth and competitiveness. Petrostates can suffer from the resource curse, meaning that their abundance of natural resources can have detrimental impacts on other parts of the economy, as well as negative social and political impacts. Petrostates, it has been argued, see increasing inequality with increasing wealth, because they do not depend upon the labour of their inhabitants but upon a tiny elite's luck in owning their valuable resources. It is also argued that they have no incentives to abide by rules regarding reduction of greenhouse gas emissions, and that consuming states have no ability to control the polluting petrostates.


Environmental and climate concerns

The extraction and production of oil can have significant environmental and ecological impacts, including pollution,
habitat destruction Habitat destruction (also termed habitat loss or habitat reduction) occurs when a natural habitat is no longer able to support its native species. The organisms once living there have either moved elsewhere, or are dead, leading to a decrease ...
, and greenhouse gas emissions. This can lead to environmental concerns and criticism, both domestically and internationally. Recent studies challenge the assumption that the transition to sustainable energy will lead to the decline of petrostates, suggesting that their future depends on production costs and social factors. Furthermore, the low-carbon transition might provide new export opportunities for petrostates as energy-intensive sectors in developed countries decrease, potentially leading some, particularly in the Middle East, to further specialize in high-carbon sectors. Since the 2022 Russian invasion of Ukraine, Alexander Etkind has suggested that petrostates are engaging in wars because of the existential economic threat decarbonization poses to their rulers’ power and wealth. He also argues that petrostates pay absolutely nothing for the emissions and costs of climate change their oil creates abroad, nor for the emissions produced by burning oil at home. The corporate identity of state-owned oil and gas corporations has also helped insulate petrostates from requirements to restrict fossil fuel production and caused them to attempt to claim that continued fossil fuel production can be decoupled from greenhouse gas emissions. This is in spite of serious impacts of climate change in many extremely rich petrostates: they have tended to avoid playing the victim and to align with other, less affected major polluters even when severely threatened. Russia and other Central Asian petrostates also have begun in recent years to lead a powerful backlash against movements to decarbonise in the
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
.


Cultural narratives

The presence of a booming oil industry influences a nation's cultural landscape. It may manifest in conspicuous consumption, urban development, and the emergence of specific cultural symbols associated with wealth and status. The petrostate narrative often becomes intertwined with the national identity, notably in Russia and in Saudi Arabia. The story of an oil-rich nation can influence
collective memory Collective memory is the shared pool of memories, knowledge and information of a social group that is significantly associated with the group's identity. The English phrase "collective memory" and the equivalent French phrase "la mémoire collect ...
and national pride. Cultural narratives might emphasize self-reliance, economic strength, or the role of oil in nation-building.


See also

*
Big Oil Big Oil is a name sometimes used to describe the world's six or seven largest List of corporations by market capitalization#Publicly traded companies, publicly traded and investor-owned list of oil companies, oil and gas companies, also known ...
*
Energy superpower An energy superpower is a country that supplies large amounts of energy resources (crude oil, natural gas, coal, etc.) to a significant number of other countries - and therefore has the potential to influence world markets for political or econo ...
*
Oil war An oil war is a conflict about petroleum resources, or their transportation, consumption, or regulation. The term may also refer generally to any conflict in a region that contains oil reserves or is geographically positioned in a location where ...
* Rentier state


References

{{Natural resources Authoritarianism Petroleum politics