FUTURE STATE
Oil economies at a crossroad
The nearer horizon of peak oil demand and the spread of renewable energy are undermining the very economic foundations of many oil-dependent states in the longer term (the topic of my TEDx talk). All in all, they push governments to seek alternatives to old models of governance and the redistribution of rents.
With the tectonic shifts in energy markets, many hydrocarbon economies found themselves at a crossroads: they are faced with a critical question about the future of the petro-state model — and what might eventually replace it.
FUTURE STATE
Oil economies at a crossroad
The nearer horizon of peak oil demand and the spread of renewable energy are undermining the very economic foundations of many oil-dependent states in the longer term (the topic of my TEDx talk). All in all, they push governments to seek alternatives to old models of governance and the redistribution of rents.
With the tectonic shifts in energy markets, many hydrocarbon economies found themselves at a crossroads: they are faced with a critical question about the future of the petro-state model — and what might eventually replace it.
There is at least one strong example of a system like this. In the U.S. state of Alaska, that takes the form of a special oil dividend, known as the Permanent Fund Dividend, which has been paid directly to all residents of Alaska on an annual basis since 1983. The fund has grown from an initial $734,000 in 1977 to $74.5 billion in the market value of its assets in 2022.
The underground dividend — the Alaskan model
I strongly believe that it is the quality of institutions that essentially determines whether natural resource abundance is a blessing or a curse. In a number of states, like Australia or
Norway, which had strong democratic institutions before the commodity boom, they were able to direct resource rents towards building a resilient economy underpinned by the rule of law — those institutions were not corrupted by resource rents. Is it possible to replicate this success in countries where institutions and civil society are less robust? How to avoid falling into the trap of political autocracy fuelled by resource rents? Several economists have suggested that resource economies should distribute part of their natural resource revenues directly to their citizens — so that the rents are not channelled via the government apparatus.
There is at least one strong example of a system like this. In the U.S. state of Alaska, that takes the form of a special oil dividend, known as the Permanent Fund Dividend, which has been paid directly to all residents of Alaska on an annual basis since 1983. The fund has grown from an initial $734,000 in 1977 to $74.5 billion in the market value of its assets in 2022.
The underground dividend — the Alaskan model
I strongly believe that it is the quality of institutions that essentially determines whether natural resource abundance is a blessing or a curse. In a number of states, like Australia or Norway, which had strong democratic institutions before the commodity boom, they were able to direct resource rents towards building a resilient economy underpinned by the rule of law — those institutions were not corrupted by resource rents. Is it possible to replicate this success in countries where institutions and civil society are less robust? How to avoid falling into the trap of political autocracy fuelled by resource rents? Several economists have suggested that resource economies should distribute part of their natural resource revenues directly to their citizens — so that the rents are not channelled via the government apparatus.
That is why I believe that it is crucially important to explore how models such as the Alaskan Oil Dividend can be used in order to keep the invasive state at bay. Ultimately, it is about looking for ways that resource rents can be managed in a more prudent, responsible, and fair way. My experience convinced me that analysing recent developments through the prism of history is crucial for understanding where the resource state is headed and what might replace it. I very much hope that my research will be a helpful contribution to this understanding.
The future of resource rents
The era of big oil might be nearing an end, but the very concept of natural resources is with us to stay — whether rare earth metals, lithium, or other elements essential for growth and human innovation.
That is why I believe that it is crucially important to explore how models such as the Alaskan Oil Dividend can be used in order to keep the invasive state at bay. Ultimately, it is about looking for ways that resource rents can be managed in a more prudent, responsible, and fair way. My experience convinced me that analysing recent developments through the prism of history is crucial for understanding where the resource state is headed and what might replace it. I very much hope that my research will be a helpful contribution to this understanding.
The future of resource rents
The era of big oil might be nearing an end, but the very concept of natural resources is with us to stay — whether rare earth metals, lithium, or other elements essential for growth and human innovation.