Oil, Renewables and the Slow Unravelling of Petro‑States
With Venezuela back in the headlines, another oil state is once again under pressure for regime change. This time the focus is Iran.
Iran has faced mass protests against its authoritarian regime before, but the current moment feels more brittle. The country is not only grappling with political repression and economic stagnation, but with a looming environmental crisis. At this point it is genuinely unclear whether Tehran or Kabul will run out of water first.
It’s worth starting with some well‑worn political theory. Karl Marx argued that a society’s economic base ultimately shapes its political and social structures. Friedrich Hayek, from the opposite ideological direction, made a parallel claim: liberal capitalism and liberal democracy tend to rise together. Where the state controls people’s economic lives, political freedom usually withers.
Around the world, economies built on the extraction of fossil fuels show a striking tendency towards oligarchy and authoritarianism. Whoever controls the oil controls the revenue, and whoever controls the revenue controls the politics. In the Middle East, oil wealth sustained absolute monarchies and theocratic regimes alike. It also financed the export of a particularly austere, socially conservative form of Islam across the region and far beyond it.
That settlement is now under strain. The oil price is falling — and looks set to remain under pressure — as the global energy system shifts away from fossil fuels, with Trump attempting to weaponise Venezuelan oil supply to push prices down. In the first half of 2025, renewable energy sources, driven overwhelmingly by solar and supported by wind, generated more electricity globally than coal for the first time on record. This was not a marginal change but a structural one.
Solar power is becoming cheaper so quickly that it is rendering the sunk costs of fossil fuel infrastructure increasingly irrelevant. Once renewables undercut coal and gas on price, the old economic logic collapses with surprising speed.
Every sustained fall in the oil price weakens the regimes that oil wealth props up. The effects do not stop at national borders. The Gulf oil economies have long provided relatively well‑paid employment for young men from North Africa through to Pakistan. As those opportunities shrink or become less lucrative, economic stress and political instability ripple outward, from regime to regime.
From the Iraq War to the Arab Spring to repeated protest waves in Iran, declining oil revenues have played a quiet but decisive role in destabilising governments that once looked immovable. Some petro‑states are attempting to diversify into tourism, sport, and leisure. Those that cannot — or will not — face continual challenges to their authority.
The Iranian government may survive the current round of protests. Ironically, the threat of American or Israeli military strikes could even help keep the clerical regime in place, just as NATO airstrikes ultimately prolonged Slobodan Milošević’s rule in Serbia rather than ending it.
But a failing economy, a political system incapable of reform, and an accelerating water crisis that threatens major cities are problems the Iranian state has no credible answers to. These are not issues that can be policed or bombed away. Should the theocratic regime in Iran fall Hamas, Hezbollah and the Houthis will lose their funding and supply of weapons. Shia fundamentalism will be in ruins. It will also have an impact on Sunni Islamist groups in Iraq and elsewhere.
The deeper irony is that Donald Trump appears determined to use Venezuelan oil to push the United States further towards a petro‑state model just as such regimes are becoming globally less stable. Long‑term national resilience does not seem to feature in this calculation. What matters is extracting enough wealth to entrench a permanent oligarchy — even if the country beneath it grows steadily poorer.
After all, that approach never troubled Vladimir Putin and his circle.
Post-script
This helps explain why so many authoritarian regimes are openly hostile to climate policy. Decarbonisation is not just an environmental threat to them, but a political one. If power no longer flows from oil and gas rents controlled by the state, then the economic foundations of authoritarian rule begin to crumble. Climate denial, culture-war rhetoric, and resistance to international climate agreements are not accidents or ideological quirks; they are rational responses by regimes whose survival depends on fossil fuels remaining central to the global economy.
Attempt 2 (I have left replies on some of your other posts that did not display, this time I copy and pasted before submitting)
The sooner Europe doubles down on renewable energy the better – we need to be done from interference from America and Russia.
His holy orangeness speaking at Davos claimed China is too smart for wind power, they just sell them to everyone else. This is of course either and outright lie or plain simple ignorance, you pick which, it doesn’t matter. What does matter is that he said it, and people will believe it, not the decision makers or politicians, it’ll be the right wing masses that believe it – those who make political changes difficult to pass.
For reference China installs more renewable energy facilities in one week than the UK does in one year. In 2023 China commissioned more solar capacity than the entire world combined. Chinas wind capacity exceeds Europe and the US combined. I could go on, but you get the picture.
China do it because they believe that there is a huge competitive advantage to be an early adopter of renewables. They are right. The crazy thing is that the USA were world leaders in electric cars 10 years ago, but they have handed that entire global market to china and korea. Meanwhile protecting American companies behind tariff and non-tariff barriers just makes them less and less competitive.