What nations profit the most from fossil fuel extraction?

The well-being of a nation’s population is determined in part by how the nation’s wealth is managed. Wealth has two principal components. The first is the stock of physical assets such as machines, buildings, and power grids, and human assets such as labor, knowledge, and social connections. The second is the stock of natural assets that includes ecosystems, farmland, forests, minerals, and fossil fuels.

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Following standard financial practice, the value of a nation’s fossil fuel assets is calculated by multiplying the physical volume of the energy resource (barrels of oil, cubic feet of natural gas, tons of coal) by its unit value ($/barrel, etc.). The unit values for natural resources are equal to the total value of production (or revenues) minus the total cost of production. This quantity is called economic rent. Think of rent as a type of profit made on each barrel of oil, a cubic foot of natural gas, or a ton of coal extracted. At any point in time, the value of a nation’s oil resources, for example, is the value of the resource in each future year summed over the expected life of the oil resource itself. Future values are discounted to reflect the lower value people place on costs and benefits incurred in the future compared to today.

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Fossil fuels comprise about 80% of the world’s energy use, so you will not be surprised to learn that nations with large fossil fuel resources also hold great quantities of economic wealth. Countries such as Saudi Arabia, Russia, the United States, and China measure their fossil fuel wealth in trillions of dollars. The constant dollar value of fossil fuel assets increased by a factor of 2 to 3 in many nations from 1995 through about 2015 due to increasing energy reserves and generally rising prices.1 Fossil wealth declined through 2018 due to falling energy prices.

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Regional distributions of the three major fossil fuels show distinct patterns. Oil wealth is highly concentrated in the Middle East and North Africa with Saudi Arabia holding a $5 trillion asset. Russia has more than a trillion dollars in natural gas wealth, but its ability to capitalize on that asset was dramatically reduced when European customers enacted important bans or curtailments in its invasion of Ukraine in 2022. Coal exhibits a very different pattern in China, India, and the United States, which hold the dominant shares of wealth.

Some nations have used that tremendous wealth to improve the quality of life for some of their citizens. Levels of per capita GDP in Qatar ($85,128), Saudi Arabia ($45,104), and Bahrain ($41,336) are among the highest in the world. The same countries rank in the “very high human development” category by the United Nations Human Development Programme.

However vast fossil wealth alone does not lead to desirable social outcomes. Countries such as the United States and Saudi Arabia hold vast fossil fuel assets but exhibit relatively high-income inequality levels. Russia is rich in coal, oil, and gas, but ranks very poorly among nations regarding political corruption. China is richly endowed with fossil fuels but ranks poorly among nations regarding the rule of law.


1 World Bank. 2021. The Changing Wealth of Nations 2021: Managing Assets for the Future. Washington, DC: World Bank. Link

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