Fossil Fuels’ Political Power

A 2021 IMF analysis made a striking case: if governments adopted “efficient fuel pricing”—by eliminating implicit subsidies that hide the environmental, health, and social costs of fossil fuels—global CO₂ emissions would fall by 36%. That reduction would be enough to keep warming within 1.5°C. It would also generate public revenues equal to 3.8% of global GDP and prevent an estimated 7–9 million premature deaths from air pollution.

The logic is straightforward: stop underpricing fossil fuels, and both the climate and public health benefit.

And yet, the opposite continues to happen.

Just one year later, fossil fuel subsidies increased to an estimated $1.3 trillion in direct support and $5.7 trillion in indirect support worldwide. In that same year, fossil fuel companies earned $219 billion in profits.

This contradiction—between what economic evidence recommends and what policy delivers—points to a deeper reality: fossil fuels are not just an energy system; they are a political system.

Because oil and gas are so deeply embedded in the global economy, the industry has been able to convert its economic power into considerable political influence. That influence is then used to shape laws, preserve subsidies, and slow the transition to cleaner energy alternatives, creating a self-reinforcing cycle.

The United States offers a clear illustration. In 2024 alone, the oil and gas industry contributed nearly $249 million to federal elections and spent roughly $150 million on lobbying. Much of this funding flowed to candidates and policymakers positioned to defend industry priorities.

This dynamic is not new. As early as 1965, the President’s Science Advisory Committee warned that rising CO₂ levels could significantly alter the global climate. The Johnson administration increased research funding—but stopped short of meaningful policy action. Lyndon Johnson’s close ties to the Texas oil industry reflected a broader pattern: awareness without disruption.

By 1983, the science of climate change had become even clearer. An EPA report outlined policy options ranging from fuel taxes to outright restrictions on fossil fuels, projecting significant warming by the mid-21st century and warning that delay would only increase the cost of energy transition. The Reagan administration dismissed the findings as “alarmist.”

Meanwhile, atmospheric CO₂ concentrations kept rising—from 320 ppm in 1965, crossing 350 ppm considered to be the threshold for stable climate in 1988 and to over 400 ppm in 2014. That year, President Barack Obama addressed the United Nations, warning that failing to cut emissions would condemn future generations to irreversible damage. His administration signed the Paris Climate Accord in 2015, signaling global leadership on climate.

But even then, contradictions persisted. The administration lifted a 40-year ban on U.S. oil exports, helping position the United States as a net oil exporter by 2019—an outcome later celebrated as a policy success by Mr. Obama himself.

Obama administration also declined to settle Juliana v. United States-a landmark youth climate lawsuit seeking to compel the federal government to end support for fossil fuel development and recognize a constitutional right to a stable climate. The administration had also expanded financing for fossil fuel projects abroad, providing $70 billion in investment which was three times the amount invested by the Bush administration..

In recent years, climate opposition has often been associated with Donald Trump. Trump withdrew the U.S. from the Paris Agreement and expanded support for fossil fuels. But the broader pattern extends beyond any one party.

But Democrats have also resisted aggressive climate action or supported continued fossil fuel development. In 2018 Nancy Pelosi dismissed the Green New Deal, a detailed package of climate and economic policies, as “the green dream or whatever they call it,” appointing nine Democrats to the newly minted House committee on climate who together had received $200,000 in campaign contributions from fossil fuel companies. Joe Biden, despite advancing important climate legislation, approved large-scale projects like Alaska’s Willow Project and oversaw a surge in drilling permits.

The Real Constraint

Taken together, these examples reveal a consistent pattern across decades: scientific warnings grow clearer, economic solutions become more compelling, and yet political action remains constrained.

The central barrier to climate action is not a lack of knowledge or viable policy solutions. It is the entrenched political power of the fossil fuel industry.

As long as fossil fuels remain underpriced—and as long as the industry continues to shape the policies that govern it—the transition to a low-carbon economy will be delayed, regardless of the mounting costs.

Breaking this cycle will require more than technological innovation or incremental policy reform. It will require confronting the political structures that allow private profits to outweigh public costs.