The Electrostate is ascendant but it’s precursor isn’t going away anytime soon. I’ve been reading and writing about the petrostate for the past week, and I want to bring those pieces together into one story. When I started digging into the idea, I thought of it as a label for a certain kind of country—oil-rich, powerful in OPEC meetings, often authoritarian, sometimes flashy, always swimming in petroleum money. But the deeper I went, the more it became clear that the petrostate is less a type of country than a syndrome, a way of organizing politics and economics around a single commodity that distorts everything else.

Could that commodity be solar in the future?

We all know the headline names—Saudi Arabia, Russia, Venezuela—but I want to show you why they matter, what holds them together as a category, and why the logic of the petrostate is now under unprecedented pressure. And then I want to raise a question that sounds tongue-in-cheek but isn’t: could the United States itself be slipping into petrostate ways of thinking?

Compassionate Racism in “Tintin in America”

What is a Petrostate?

The textbook definition is straightforward: a petrostate is a country whose economy and government budget depend heavily on oil and gas revenues. Wikipedia lists Saudi Arabia, Kuwait, Russia, and Venezuela, but also notes that even subnational regions like Alberta, Louisiana, or Wyoming sometimes qualify. That’s true, but it’s only the beginning.

In practice, becoming a petrostate means oil and gas revenues make up such a big share of government income that they rewire how the state relates to its people. In normal states, governments tax their citizens, and citizens, in turn, demand accountability for how their money is spent. In petrostates, the money flows the other way: governments get their income from oil rents and distribute benefits downward, buying loyalty instead of earning it. That insulation from taxation is politically corrosive. It makes authoritarianism easier and accountability harder.

Add to that what political scientist Terry Lynn Karl famously called the paradox of plenty: when oil money gushes in, governments stop bothering with economic diversification. Why invest in new industries, train workers for manufacturing, or support competitive businesses when “liquid gold” is always there? Easy money dulls the incentives for innovation. Over time, the rest of the economy withers, while the state grows addicted to a single commodity.

And finally there’s volatility. Oil and gas markets are unstable by nature. Prices swing with wars, recessions, new technologies, OPEC maneuvers. When they rise, petrostates enjoy booms; when they fall, the whole budget collapses. Governments that rely on rents instead of taxes are exposed to this rollercoaster, which means fiscal crises can hit suddenly and brutally.

These three mechanisms—insulation from citizens, lack of diversification, and volatility—define the petrostate syndrome. And together they create brittle, distorted politics. Let’s look at what that looks like in practice.

Venezuela: a cautionary tale

If you want to see the petrostate trap in its most dramatic form, look at Venezuela. In the late 1990s and early 2000s, Hugo Chávez rode an oil boom to power and international fame. Venezuela has some of the largest reserves in the world, and for a while, high prices and populist redistribution made the country a model for leftists across Latin America. Oil funded social programs, subsidized food, and allowed Chávez to thumb his nose at Washington.

But the paradox of plenty never went away. The country became even more dependent on oil than before. When prices fell—first after the 2008 financial crisis, then again in the mid-2010s—Venezuela’s fiscal base crumbled. Infrastructure had been neglected, the state oil company was mismanaged, and corruption spread everywhere. International oil service firms pulled out, sanctions isolated the regime, and production plummeted.

By the time Nicolás Maduro succeeded Chávez, the boom was long over. Inflation turned into hyperinflation. Shelves emptied. Millions of Venezuelans fled the country. The tragedy is that the resource wealth that was supposed to secure prosperity ended up hastening collapse. And Venezuela shows us a larger truth: ideology doesn’t protect you from the petrostate trap. Whether you call yourself socialist or capitalist, metabolics trumps ideology.

Saudi Arabia and Russia: the archetypes

Saudi Arabia and Russia are the two pillars of the contemporary petrostate order. They are not collapsing like Venezuela, but their politics are shaped by the same forces.

Saudi Arabia’s rulers have used oil revenues to sustain a social contract based on distribution rather than taxation. Aramco, the national oil company, is effectively the state’s cash machine. When prices are high, subsidies flow, mega-projects get built, and the regime looks secure. When prices fall, the government has to cut spending or borrow, and the royal family faces nervous whispers about stability. The much-touted “Vision 2030” is an effort to break out of dependence, but it’s an open question whether the kingdom can truly diversify an economy that has been wired to hydrocarbons for decades.

Russia tells a parallel story. Energy exports make up a huge share of the state budget, and companies like Gazprom and Rosneft are not just businesses but instruments of state policy. Oil and gas are wielded as tools of foreign influence: pipelines become weapons as much as infrastructure. But the reliance on rents means Russia is vulnerable to price swings, sanctions, and technological disruption. As 2025 unfolds, volatility in oil markets is biting into Russia’s ability to finance its war and its domestic obligations. The petrostate logic that once made Moscow powerful is now becoming a liability.

Both Saudi Arabia and Russia illustrate how oil rents can sustain authoritarianism, bankroll international ambition, and insulate elites—but also how that very insulation leaves regimes exposed to external shocks.

The Soviet Union: the Petrostate in disguise

We don’t usually think of the Soviet Union as a petrostate. It was a planned economy, a superpower, an ideological rival to capitalism. But by the 1970s and 1980s, hydrocarbons had become its lifeline.

By 1989, the USSR produced more than a fifth of the world’s energy. Oil and gas each made up about a third of its output. Exports brought in the hard currency the Soviets needed to buy food and machinery from abroad. Energy was the ballast that kept the ship afloat.

But the Soviet petrostate was riddled with inefficiencies. Quotas were unrealistic, incentives were distorted, and conservation was neglected because energy seemed infinite. When oil prices fell in the 1980s, revenues dropped sharply. The result wasn’t just a fiscal problem but a systemic crisis. Resource dependence had masked deeper weaknesses in the planned economy. When the rents collapsed, so did the Soviet state.

Seen in retrospect, the Soviet Union towards its end was a petrostate in disguise. Its official ideology was Marxism, but its metabolism was oil and gas.

Metabolism > Marxism

The Shale Revolution

For decades, OPEC seemed invincible. Petrostates could coordinate supply, push prices up, and wield geopolitical influence. Then the shale revolution hit.

Starting in the mid-2000s and accelerating in the 2010s, hydraulic fracturing and horizontal drilling turned the United States into the world’s largest producer of oil and gas. Fields in Texas, North Dakota, and Pennsylvania flooded markets with new supply. By 2019, the U.S. had become a net exporter of energy for the first time in decades.

Shale is different from conventional oil. It’s more modular, more responsive to price signals, more capital-intensive. That flexibility makes it hard for OPEC to control markets the way it once did. The old rentier monopoly cracked.

At the same time, the clean energy transition began to loom larger. Investors started anticipating carbon constraints, stranded assets, and declining demand for fossil fuels. Analysts warned of a “run on fossil fuels”: if everyone expects future prices to fall, producers rush to extract now, depressing prices further. Groups like Carbon Tracker estimate that petrostates could lose half their fiscal revenue over the next two decades under a strong climate scenario.

In other words, the petrostate order is being squeezed from both sides: new supply undermines monopoly power, and new technologies and policies threaten long-term demand.

The U.S. as a partial Petrostate

Which brings me to the United States. It might sound absurd to call America a petrostate. After all, the U.S. has one of the most diversified economies in the world. Its government relies on taxes, not oil rents. Its institutions are stronger and more accountable than in Saudi Arabia or Russia.

And yet, there’s a kernel of truth in the provocation. The shale boom of the 2010s added about a point to GDP growth, cut the trade deficit, and reshaped entire regions. Energy independence became a political slogan. Fossil fuel lobbies gained renewed clout. And under Trump’s return to power in 2025, the petrostate logic is once again visible in Washington.

The Energy Department is now led by Chris Wright, a former fracking executive skeptical of climate policy. The Interior Secretary, Doug Burgum, has opened millions of acres for new drilling and pushed a revival of coal. The administration has announced hundreds of millions in subsidies for coal plants, justifying it as necessary to meet surging AI-driven electricity demand. The “One Big Beautiful Bill” rolled back clean energy tax credits, tilting the field back toward fossil incumbents.

So no, the U.S. is not Venezuela or Saudi Arabia. But parts of it behave like a petrostate. Call it a hybrid: a Red Petrostate competing with a Blue Electrostate for votes, dollars and eyeballs.

The World in 2025

This year has been full of reminders that the petrostate model is brittle. Oil prices are trending downward into the low $60s. OPEC+ has announced production hikes, even as new flows from Kurdistan return to markets. Saudi Arabia is raising prices to Asia to keep revenues up. Kuwait, paradoxically, has faced blackouts despite its oil wealth. Russia is struggling to finance both war and welfare as energy revenues wobble.

The petrostate order that defined much of the twentieth century looks increasingly fragile (then again, “Peak Oil” went out of fashion when fracking became a thing).

Some regimes are trying to pivot—sovereign wealth funds in Norway and Abu Dhabi, Saudi Arabia’s Vision 2030, the UAE’s green hydrogen projects. Others are doubling down, hoping for one last boom before the transition really bites.

But the direction of travel is clear. The world is moving, however haltingly, toward a post-carbon order. Petrostates are either going to adapt or face crises that look like Venezuela’s writ large.

Closing thoughts

When we look back over the past century, it’s striking how much oil shaped the political imagination. Wars were fought over it, fortunes made from it, dictatorships propped up by it. Oil gave us petrostates, and petrostates gave us a distorted kind of modernity.

Now that order is fraying. Shale has disrupted supply. Climate policy threatens demand. Petrostates are squeezed, brittle, and nervous. Some will try to reform; many will cling to the old model until it breaks.

And in the middle of it all, the United States—diversified, innovative, powerful—flirts with petro-logic just as it should be leading the transition away from it. That, perhaps, is the deepest irony of all. The petrostate is dying, but not fast enough, and not without pulling others into its orbit.