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When gas prices jumped more than 30 percent in some states in mid-March due to the war in Iran, many climate advocates made the case that fossil fuels are volatile commodities, and a transition to clean energy offers far more financial stability for American households. I wholeheartedly agree with that argument. But it leaves out a crucial part of the story.
Sure, if the world ran on solar panels, wind turbines, nuclear reactors, heat pumps, electric vehicles, bicycles, and reliable public transportation, energy prices would be cheaper and more predictable, including during a war. Once a renewable electricity source is built, global energy markets can’t really disrupt it. We don’t have to import the wind or the sun. But that’s not all a green economy accomplishes.
The regime in Iran earned $43 billion in revenue from crude oil exports and sales in 2024 and billions more from petrochemicals and other adjacent industries. Up to one-third of the state budget comes from oil revenue (significantly down from previous years), and over half of Iran’s total oil proceeds are allocated to its armed forces. Billions of dollars per year more fund regional terror groups including Hamas, Hezbollah, and the Houthis, and these groups also work in conjunction with Iran’s armed forces to smuggle oil to international buyers so they can fund weapons and terrorist activity with the proceeds.
This oil fundraising has had disastrous consequences. The regime in Iran took over fifty American diplomats hostage for 444 days in 1979-81; backed Hezbollah’s killing 241 U.S. military personnel in Beirut in 1983; financed Hamas’s October 7, 2023 terror attack in Israel; backed the Houthis as they attacked over 100 merchant vessels in the Red Sea from 2023-2025 disrupting global shipping and killing sailors; and conducted its deadliest protest repression in decades this past January, killing over 30,000 of its own citizens according to multiple credible estimates. The more the world depends on oil, the more leverage this Iranian regime has to bring in massive flows of money, maintain cozy relationships with international buyers (primarily China), exert economic pressure on adversaries like the United States, destabilize the Middle East, and oppress the citizens of Iran without consequence.
The real wartime case against oil is not just that it spikes gas prices. As I published in Times of Israel this morning and will expound upon here, the deeper issue is that oil dependence props up the very regimes and crises that make those spikes inevitable. A clean energy transition alone won’t solve the Middle East, but in disempowering regimes like Iran’s, it could reduce the likelihood of a war like today’s, bring new hope for the Iranian people, and ensure no malintentioned foreign adversaries have the power to skyrocket our energy bills.
To be clear, climate communicators and advocates are absolutely right in pointing out that when the world runs on fossil fuels, a war thousands of miles away can still hit ordinary people almost immediately. The Iran War has already triggered what recent reporting has described as the largest disruption in the history of the modern oil market, with Brent crude hovering around $100 a barrel and roughly a fifth of the world’s oil and liquefied natural gas flows thrown into turmoil through the Strait of Hormuz. And that price is not limited to what drivers see at the pump. In Puerto Rico, where oil-fired plants still make up about 60% of generating capacity, analysts expect higher oil prices to translate directly into higher electric bills. Furthermore, fertilizer prices are already up 30% to 40%, with around 30% of global traded fertilizer needing to go through the Strait of Hormuz. And Dow Chemical Company recently announced that it would double a previously announced price hike in plastic resins as their access to raw materials is impeded. Fossil fuel dependence does not just make commuting more expensive during a war. It leaves entire electric grids, food systems, and household budgets exposed.
Many are naming these symptoms, and that’s important. But naming the disease seems to be a lot less popular.
The structural problem here is something social scientists often call the “resource curse.” The resource curse refers to a pattern in which countries rich in highly lucrative, easily captured resources often wind up with weaker institutions, more corruption, more political repression, greater economic volatility, and sometimes slower long-term development than resource wealth should seem to allow. It does not mean natural resources are inherently bad or that every oil-rich country is destined for misery, but the phenomenon is common enough and counterintuitive enough to warrant explanation — after all, shouldn’t natural resources make a country more prosperous, not less? Scholars have proposed several mechanisms for the resource curse: commodity price swings can whipsaw entire economies; price booms can crowd out other sectors; and, most importantly, governments flush with money from resources often have less need to tax their citizens broadly, which can weaken the normal pressure for accountability.
The resource curse has been a hot debate among social scientists for decades, with historical and current examples both demonstrating and defying the theory. However, according to UCLA professor Michael Ross in a 2015 Annual Review of Political Science paper, the resource with the most robust evidence in favor of the curse is petroleum. Ross found petroleum wealth tends to make authoritarian regimes more durable, it leads to heightened corruption, and in low- and middle-income countries, it helps trigger violent conflict. The review references academic literature with more specific findings as well. There is statistical support for the “rentier effect,” which argues that abundant oil revenues allow a regime to lower taxes and increase public goods, thus reducing accountability and dissent. Other theories suggest these regimes may use this revenue not for public goods but rather to invest in repression, influence foreign support, or spend more on their military, ensuring soldiers’ loyalty in case of an uprising.
If one were to argue in favor of the resource curse’s existence and importance, the regime in Iran might well be Exhibit A. The 1979 Iranian Revolution replaced Mohammad Reza Pahlavi’s pro-Western, autocratic monarchy with a strict Islamic theocracy under Shia cleric Ayatollah Ruhollah Khomeini. Once the Islamic Republic took power, it inherited a state shaped by oil rents. Though Khomeini enjoyed broad public support very early in his tenure, those oil rents meant he did not need to build and maintain legitimacy through broad taxation and public buy-in. He could use that revenue in the early years of his rule to stay in power and impose compulsory hijab, roll back women’s rights in marriage and divorce, segregate public life by gender, purge universities and schools of secular and dissident voices, censor books, film, music, and the press, systematically persecute Bahá’ís, and constrain and intimidate Jews, Christians, Zoroastrians, secular liberals, leftists, monarchists, and many other religious and political minorities, while empowering revolutionary enforcers and later morality police to strictly enforce those draconian policies. By 1985, the regime had silenced, imprisoned, or exiled most pre-revolutionary political forces. Without oil revenues providing the regime with easy external cash flow, it is hard to imagine Khomeini could have transformed Iran into a strict Shi’ite theocracy as quickly and forcefully as he did.
Oil revenues continued to prove indispensable to the regime’s continuation through the Iran-Iraq War in the 1980s. After the 1979 revolution, the Iraqi government initially seemed to welcome Khomeini and called for an Iraqi-Iranian friendship. Khomeini soundly rejected the overture, instead calling for an Islamic Revolution in Iraq to replace Saddam Hussein’s secular Sunni government with a fundamentalist Shia one. Meanwhile, the Iranian regime had executed dozens of senior generals and purged thousands of officers from the army in its early months, leaving it vulnerable when the war broke out in 1980. Despite the war’s devastation in Iran, oil gave the regime funds to keep the war effort going, expand the role of the Islamic Revolutionary Guard Corps (whose mandate is not to protect Iran writ large but to specifically protect the Islamic Republic), and preserve oppressive state institutions that ultimately outlasted the war. It is again hard to imagine the regime surviving a self-imposed gutting of its own military and building a whole new fighting force while goading a powerful, ideologically-opposed next door neighbor were it not for oil.
After Khomeini died in 1989 and Ayatollah Ali Khamenei took over as supreme leader, the resource-curse story continued. For decades, oil did not help Iran achieve prosperity as intuition would suggest. Instead, it gave the regime room to make disastrous decisions, survive sanctions and unrest, and avoid the kind of collapse that might otherwise have forced real political change.
One of the clearest examples of Iran’s resource curse came in the leadup to the 2015 Joint Comprehensive Plan of Action (JCPOA), better known as the Iran nuclear deal. Iran’s nuclear energy exploration traces back to 1957, but after the 1979 revolution, much of the country’s nuclear talent fled and the program fell into disarray. The Islamic Republic revived it in the 1980s with outside help from countries including Pakistan, China, and Russia, much of it hidden from the International Atomic Energy Agency until Iranian dissidents exposed key facilities in 2002. In the years that followed, Iran’s nuclear ambitions became a major international crisis, with foreign governments increasingly convinced that its advancing program needed to be contained. That pressure culminated in the JCPOA, under which Iran agreed to constrain parts of its nuclear program and accept extensive IAEA monitoring in exchange for relief from nuclear-related sanctions imposed by the United Nations, European Union, and United States. And yes, that sanctions relief would translate to cheaper global oil prices — though that of course was not the purpose of the deal, just a side-benefit in a fossil fuel economy.
Iran’s oil wealth mattered in both the leadup to the deal and the aftermath. While assessing the true dollar amount Iran would have spent in the decades before 2015 is nearly impossible due to the regime’s secrecy, Carnegie Endowment for International Peace found that Iran’s sole civilian nuclear energy reactor, Bushehr, took nearly four decades to complete and cost almost $11 billion, one of the most expensive nuclear reactors in the world. Though much of the Iranian public expresses support for civilian nuclear energy, the regime also prohibits open media coverage of the nuclear issue, quashing any debate. Given that Iran has relatively small uranium resources and Bushehr sits at the intersection of three tectonic plates, it’s plausible that the program would turn extremely unpopular if any critical media coverage were permitted. The construction of much of the rest of their nuclear program occurs underground and is meant to be undetected by foreign intelligence, so those investments must be massive as well. It’s hard to imagine a ridiculously expensive speculative nuclear program with little civilian upside sustaining over several decades if it had to be funded through public tax dollars. But with oil revenues, the regime could fund these nuclear ambitions without political accountability. In 2015, that project amounted to enough negotiating leverage to get the United States and European Union to set aside human rights, remove significant sanctions, and let money flow back to a regime whose priority was building its armed forces, financing regional terror proxies, and oppressing the people of Iran.
And unsurprisingly, the nuclear deal did not lead Iran to evolve into a more peaceful or prosperous state. Upon the deal’s signing, the regime gained free access to a little over $50 billion in frozen overseas assets. Sanctions relief also allowed the regime to dramatically boost its oil production and exports, seeing Iran’s oil and natural gas export revenue rise from $26.9 billion in FY 2015-2016 to $63.7 billion in FY 2017-2018. While it’s impossible to say this money directly funded any particular thing, the areas in which the regime boosted funding in those years are telling. In January 2017, Iranian lawmakers approved a plan to raise military spending to 5% of the budget, including funding for the long-range missile program, up from about 2%. Later that year, Iran conducted a 2,000-km-range missile test — just a hair above the distance from Iran to Israel. And though there is of course no public record of the Iranian regime’s “terrorism budget by year,” the U.S. Treasury found that in 2017, Iran’s National Development Fund and Central Bank provided $500 million to the Islamic Revolutionary Guard Corps’ Quds Force — the branch responsible for extraterritorial operations including the training, funding, and equipping of Hezbollah in Lebanon and Syria, the Hashd al-Sha’abi in Iraq, the Houthis in Yemen, Liwa Fatemiyoun in Afghanistan, Liwa Zainabyoun in Pakistan, and Hamas and Palestinian Islamic Jihad in Gaza and the West Bank. Moreover, the U.S. Treasury found in May 2018 that Iran’s central bank governor and an aide had covertly moved millions of dollars through an Iraq-based bank to Hezbollah.
By late 2023, the consequences of that investment were on full display. Just days before the regime’s ideological rival of Saudi Arabia was expected to move closer to normalizing relations with Israel, Hamas — long backed by Iran with funding, weapons, and training — launched the October 7 attack on Israel, killing 1,200 people, mostly civilians, including 46 Americans, and taking more than 250 hostages, including 12 Americans. On October 8, Hezbollah began firing rockets and shells from Lebanon into northern Israel, leading about 60,000 people to be evacuated, many of whom have yet to return home two and a half years later. By October 19, the Houthis had joined in, launching cruise missiles and drones from Yemen toward southern Israel and eventually escalating into wide-scale attacks on commercial shipping in the Red Sea. The following April, the Iranian regime fired at Israel directly from its own soil for the first time, launching a barrage of more than 300 drones and missiles.
It was not only Israelis who paid the price for the regime’s proxy strategy. By 2023, Hezbollah was more powerful than the Lebanese military and held veto power in Lebanon’s parliament. The Houthis controlled Yemen’s capital and territory containing 70% to 80% of Yemen’s population. Hamas had ruled Gaza with an iron fist since 2007. Whether the Islamic Republic endorsed the multi-front attacks or merely supplied the funding, weapons, and training that made them possible, its strategy helped put civilians across the region in danger. Tens of thousands in Gaza and Lebanon have been killed in Israel’s counteroffensive, many more have been displaced, and peace, security, and any realistic path to Palestinian self-determination feel further away than ever.
Meanwhile, economic conditions for ordinary Iranians never improved in the way the deal’s defenders had promised, and each new round of protest was met with increasingly barbaric repression. Disillusionment first bubbled over in December 2017, when tens of thousands of Iranians in more than 140 cities protested high prices, Iranian intervention across the Middle East, compulsory hijab, and the regime itself. Authorities responded by banning English in primary schools, censoring media coverage, restricting internet access, killing around 41 demonstrators, and arresting 3,700. One protester, Vida Movahed — the mother of a 19-month-old baby — removed her headscarf, tied it to a stick, and stood on a utility box in Tehran. She was arrested on the spot and transferred to Evin Prison for a month until a human rights lawyer got her released with a very expensive bail.
That pressure resumed in 2018 and 2019 through rolling trucker strikes, bazaar closures, labor actions, and teacher protests across dozens of cities, driven by inflation, unpaid wages, corruption, and the sense that the post-JCPOA economy still was not delivering for ordinary people. Many women bravely reenacted Vida Movahed’s protest as well and faced arrests and police violence. By late 2018, authorities had arrested at least 256 truckers and detained labor activists and teachers as the unrest kept spreading. Then, in November 2019, after the government abruptly raised fuel prices by at least 50 percent, protests exploded nationwide and were met with the bloodiest crackdown in the Islamic Republic’s history to that point: Ayatollah Khamenei ordered officials to do “whatever it takes,” and roughly 1,500 people were killed in less than two weeks.
The cycle continued in 2021, when thousands of oil and petrochemical contract workers struck over wages and working conditions, and demonstrations in Khuzestan over water shortages and government mismanagement spread into anti-government unrest. Security forces again answered with lethal force, killing as many as 23 people that year as they fired on fuel couriers and protesters from ethnic minority communities. Then in September 2022, the death of 22-year-old Kurdish Iranian woman Mahsa Amini, who had been arrested over hijab enforcement and was beaten to death by police according to a UN probe, triggered the boldest nationwide protests yet against the regime. Those protests were crushed with violence too: more than 500 people, including 71 minors, were killed and thousands were arrested. And then came the largest uprising and harshest crackdown in modern Iranian history this past January, when economic collapse again turned into demands for an end to the regime, protests spread to 200 cities, and Khamenei ordered security forces to use live fire, resulting in credible estimates of more than 30,000 casualties. Nearly every year since the JCPOA, Iranians have taken to the street to protest their oil-funded government’s social oppression and economic delinquency. And every time, that oil-rich regime stood strong, and the Iranian people paid a devastating price.
This is what global oil dependence is enabling. It is not just enabling price spikes at the pump or higher utility bills during a war. It is enabling a regime to imprison women of any faith for showing their hair, gun down protesters by the thousands, bankroll terror proxies across the region, repeatedly drag millions of innocent people into conflict, and maintain enough control over global energy markets to keep the rest of the world from stopping them. It is as horrific a case study on the resource curse as one could possibly imagine. A transition away from oil will not democratize Iran overnight, erase its ideology, or solve every conflict in the Middle East. But unlike the current war, which has done everything but stabilize the region and liberate Iranians, a clean energy transition would peacefully cut off the regime’s single greatest source of easy money and the leverage that comes with it. The fewer things the world runs on oil, the less power regimes like Iran’s will have to fund repression at home, violence abroad, and chaos for everyone else. Today’s war either wouldn’t be happening, or it would be a vastly different power balance.
Why do environmentalists use only gas prices as their wartime clean energy argument, rather than actually critique the Iranian regime? I have thoughts, but much of it would be speculation. A view I do encounter among many in the environmental space is that Iran’s authoritarianism is really just resistance to Western imperialism, and petrostates are prone to conflict due to the west’s oil interest rather than the resource curse phenomenon. In Iran, there is real history to fortify that argument. In 1951, Iran’s democratically elected prime minister, Mohammad Mossadegh, nationalized the country’s oil industry, which had long been dominated by the British-owned Anglo-Iranian Oil Company. Britain responded with intense economic pressure, and in 1953 the United States and United Kingdom helped orchestrate a coup that removed Mossadegh and restored the shah’s power. That episode absolutely helps explain why anti-West politics emerged in Iran and why many Iranians initially supported the overthrow of the monarchy back in 1979.
But that history does not come close to explaining the regime that exists today. Historical grievance is not the same thing as present-day causation. The Islamic Republic is not just a passive reaction to an old imperial crime. It is an active, ideologically-motivated political system that has spent decades using oil money, repression, and permanent confrontation to keep itself alive. And if imperialism alone explained Iran’s path, we would expect much more similar anti-West outcomes across oil-rich countries shaped by Western intervention. But countries like Nigeria, Angola, Gabon, and Equatorial Guinea all experienced colonization, Western fossil fuel domination, and the resource curse in the form of corruption, economic mismanagement, internal violence, inequality, and authoritarianism without developing an Iran-style anti-West ideological order with leaders enriching uranium in underground bunkers while chanting “Death to America.” Imperialism and colonialism has absolutely caused its share of problems for petrostates, but to blame that as the sole or even primary driver of Iran’s woes ignores the far more robust research on how the resource curse works and wrongly turns a blind eye to the fact that the Iranian regime has agency. The establishment of a repressive Islamic theocracy is not the only response to an ill-advised imperial overreach from 73 years ago.
I understand why gas prices have made headlines during this war, and why climate advocates have gravitated toward that as a clean energy argument. It’s true, it shouldn’t be controversial, and it’s illuminated by neon signs on every main road in America. But I have not seen a single instance of a climate advocate pushing for clean energy as a tactic to disempower the Iranian regime. Many Americans may not be foreign policy wonks, but one can easily critique Donald Trump’s mismanaged escalation of the war while still opposing an energy system that bankrolls a government that just killed thousands of its own people. Again, gas prices are the symptom, but the petrostate resource curse is the disease, and nowhere is it more disastrous than Iran. The less the world depends on oil, the less power regimes like this one will have to uphold repression at home, finance terror abroad, and economically leverage the rest of the world into turning a blind eye to their brutality.