{"690194":{"#nid":"690194","#data":{"type":"news","title":"When oil prices spike, where does the money go?","body":[{"value":"\u003Cp\u003EThe market for oil is global, which is why events like the war in Iran affect oil prices \u2013 and prices of the wide range of products made from oil \u2013 literally everywhere. Federal data shows that the price at the primary crude oil hub in the U.S. \u003Ca href=\u0022https:\/\/www.eia.gov\/dnav\/pet\/hist\/RWTCD.htm\u0022\u003Ewas US$66 a barrel in late February 2026\u003C\/a\u003E \u2013 before the U.S. and Israel attacked Iran \u2013 and $101 a barrel on April 13. \u003Ca href=\u0022https:\/\/www.npr.org\/2026\/04\/09\/nx-s1-5745144\/oil-company-profits-high-oil-prices\u0022\u003ESimilar price increases\u003C\/a\u003E have reverberated around the globe.\u003C\/p\u003E\u003Cp\u003EAs an \u003Ca href=\u0022https:\/\/scholar.google.com\/citations?user=WhCSHYkAAAAJ\u0026amp;hl=en\u0026amp;oi=ao\u0022\u003Eenergy economist\u003C\/a\u003E and an \u003Ca href=\u0022https:\/\/scholar.google.com\/citations?user=p4hJf78AAAAJ\u0026amp;hl=en\u0022\u003Einternational trade economist\u003C\/a\u003E, we field a lot of questions during such episodes, because when oil prices go up, manufacturers, businesses and ultimately \u003Ca href=\u0022https:\/\/theconversation.com\/soaring-gas-prices-and-disrupted-supply-chains-will-ripple-out-to-increase-costs-in-every-store-and-sector-of-the-economy-278349\u0022\u003Econsumers pay more\u003C\/a\u003E.\u003C\/p\u003E\u003Ch2\u003E\u003Cstrong\u003ESome basic economics\u003C\/strong\u003E\u003C\/h2\u003E\u003Cp\u003ECrude oil may be the most important commodity in the global economic system.\u003C\/p\u003E\u003Cp\u003EIt\u2019s a literal fuel for the industrial economy. It powers the engines that drive transportation and \u003Ca href=\u0022https:\/\/pavementinteractive.org\/reference-desk\/materials\/asphalt\/asphalt-production-and-oil-refining\/\u0022\u003Epaves the roads\u003C\/a\u003E vehicles drive on. It\u2019s a \u003Ca href=\u0022https:\/\/www.eia.gov\/tools\/faqs\/faq.php?id=34\u0026amp;t=6\u0022\u003Esource for plastics\u003C\/a\u003E from which the world\u2019s products get made and packaged, and a key ingredient at some point in \u003Ca href=\u0022https:\/\/theconversation.com\/oil-isnt-just-fuel-iran-conflict-could-disrupt-markets-for-everything-from-plastics-to-fertilizers-277946\u0022\u003Ealmost every supply chain\u003C\/a\u003E. Even \u003Ca href=\u0022https:\/\/theconversation.com\/hormuz-closure-threatens-the-global-food-supply-why-grocery-price-hikes-are-coming-279899\u0022\u003Efertilizers that boost the food supply\u003C\/a\u003E are made from it. In short, it is difficult to imagine modern life without \u003Ca href=\u0022https:\/\/www.business-standard.com\/world-news\/oil-role-modern-life-petrochemicals-impact-everyday-products-explained-126032300615_1.html\u0022\u003Eoil and its derivatives\u003C\/a\u003E.\u003C\/p\u003E\u003Cp\u003EAnd when its supply changes, its price changes. Economists explain this using a fundamental model of our field: the \u003Ca href=\u0022https:\/\/www.investopedia.com\/terms\/l\/law-of-supply-demand.asp\u0022\u003Esupply-demand\u003C\/a\u003E diagram. When there\u2019s less of something to go around, competition among consumers who want it and companies that need it can drive the price up.\u003C\/p\u003E\u003Cp\u003ESometimes this process can play out over time, allowing people to adjust their purchasing or activities to dampen price shocks. But when a significant source of the world\u2019s oil is effectively blocked without much advance notice, such as when the \u003Ca href=\u0022https:\/\/theconversation.com\/hormuz-closure-threatens-the-global-food-supply-why-grocery-price-hikes-are-coming-279899\u0022\u003Ethe U.S. and Israeli attacks on Iran closed the Strait of Hormuz\u003C\/a\u003E, prices can rise sharply in a short period of time.\u003C\/p\u003E\u003Cp\u003EA natural question many people ask when oil prices spike is: Where does all that additional money go, and who benefits from it?\u003C\/p\u003E\u003Cp\u003ESome people have \u003Ca href=\u0022https:\/\/mitpress.mit.edu\/9780262536165\/energy-and-civilization\/\u0022\u003Ewritten\u003C\/a\u003E \u003Ca href=\u0022https:\/\/press.princeton.edu\/books\/paperback\/9780691159638\/the-oil-curse\u0022\u003Eentire\u003C\/a\u003E \u003Ca href=\u0022https:\/\/global.oup.com\/academic\/product\/the-world-for-sale-9780197651537\u0022\u003Ebooks\u003C\/a\u003E dissecting all the places that money goes when it leaves consumers\u2019 pockets. But ultimately, the bulk of the money heads in the direction of the source of the oil itself \u2013 the oil companies.\u003C\/p\u003E\u003Cp\u003EWhat they do with the money varies widely, depending on where in the world an oil company is operating and who owns it. What also matters is the business environment \u2013 the set of laws and regulations \u2013 in which the company operates.\u003C\/p\u003E\u003Ch2\u003E\u003Cstrong\u003EMiddle East faces danger\u003C\/strong\u003E\u003C\/h2\u003E\u003Cp\u003EOil producers in the Middle East face significant new risk because of the war in Iran, including threats to production, processing locations and shipping routes. These risks raise their costs for \u003Ca href=\u0022https:\/\/www.reuters.com\/world\/middle-east\/gulfs-worst-case-scenario-2026-04-08\/\u0022\u003Einsurance, security and transportation\u003C\/a\u003E.\u003C\/p\u003E\u003Cp\u003EBut \u003Ca href=\u0022https:\/\/theconversation.com\/why-the-persian-gulf-has-more-oil-and-gas-than-anywhere-else-on-earth-279303\u0022\u003Eproduction costs in the region\u003C\/a\u003E are relatively low, so higher global oil prices typically still translate into strong profits.\u003C\/p\u003E\u003Cp\u003EFor a major exporter such as Saudi Arabia, \u003Ca href=\u0022https:\/\/www.reuters.com\/business\/energy\/saudi-aramco-oil-colossus-2024-05-30\/\u0022\u003Ethe government owns and controls nearly all oil production\u003C\/a\u003E, so high prices generally benefit the government\u2019s finances and investments, even during a war. In Saudi Arabia, oil revenue has historically been used to \u003Ca href=\u0022https:\/\/agsi.org\/analysis\/aramco-and-the-saudi-government-budget\/\u0022\u003Efund public spending\u003C\/a\u003E.\u003C\/p\u003E\u003Ch2\u003E\u003Cstrong\u003EWest Texas gets a windfall\u003C\/strong\u003E\u003C\/h2\u003E\u003Cp\u003EThe \u003Ca href=\u0022https:\/\/www.dallasfed.org\/research\/energy11\/permian\u0022\u003EPermian Basin\u003C\/a\u003E, the largest oil field in the U.S., is a long way from the Persian Gulf. When global oil prices rise because of the war in Iran, oil companies operating in West Texas effectively get a windfall gain: Prices rise more quickly than costs, at least in the short run.\u003C\/p\u003E\u003Cp\u003EThe immediate effect is more income from higher prices. \u003Ca href=\u0022https:\/\/www.houstonpublicmedia.org\/articles\/economy\/2026\/03\/11\/545798\/texas-oil-iran-war-gas-prices\/\u0022\u003EThe money largely goes to company owners\u003C\/a\u003E \u2013 meaning shareholders \u2013 through dividends, debt reduction, company-backed purchases of its own stock, and reinvestment in drilling and production. Over time, companies may decide to spend some of that windfall on building more production capacity or \u003Ca href=\u0022https:\/\/www.reuters.com\/breakingviews\/us-shale-wont-repeat-old-boom-iran-war-2026-04-02\/\u0022\u003Epipelines to get more oil and gas to market\u003C\/a\u003E.\u003C\/p\u003E\u003Ch2\u003E\u003Cstrong\u003ENorth Sea boosts government revenue\u003C\/strong\u003E\u003C\/h2\u003E\u003Cp\u003EIn the North Sea, between the island of Great Britain and Scandinavia, a mix of multinational and government-owned companies produce most of the oil.\u003C\/p\u003E\u003Cp\u003EIn the U.K., private shareholders are the primary beneficiaries of higher profits from increased oil prices, though an \u003Ca href=\u0022https:\/\/commonslibrary.parliament.uk\/research-briefings\/cbp-9578\/\u0022\u003Eadditional tax on oil and gas companies\u2019 profits\u003C\/a\u003E means the government also collects a significant share of the money, which it uses to help pay public expenses.\u003C\/p\u003E\u003Cp\u003EIn Norway, oil revenues flow into the \u003Ca href=\u0022https:\/\/www.nbim.no\/en\/\u0022\u003EGovernment Pension Fund Global\u003C\/a\u003E, the world\u2019s largest sovereign wealth fund, valued at over $2 trillion. Laws govern how much, and for what purposes, money can be withdrawn from the fund, supporting \u003Ca href=\u0022https:\/\/www.nbim.no\/en\/about-us\/about-the-fund\/\u0022\u003Epublic spending and preserving wealth\u003C\/a\u003E for future generations. This is a similar model to \u003Ca href=\u0022https:\/\/apfc.org\/\u0022\u003EAlaska\u2019s state-owned program\u003C\/a\u003E, funded by oil revenue, that pays for government services and sends an annual dividend to every permanent resident.\u003C\/p\u003E\u003Ch2\u003E\u003Cstrong\u003ERussian oligarchs get rich\u003C\/strong\u003E\u003C\/h2\u003E\u003Cp\u003ERussian oil is subject to \u003Ca href=\u0022https:\/\/www.politico.com\/newsletters\/national-security-daily\/2026\/04\/13\/the-return-of-russia-oil-sanctions-00869329\u0022\u003Estringent economic sanctions\u003C\/a\u003E imposed by major industrial countries as a response to the Russian invasion and occupation of parts of Ukraine. While the U.S. cannot control how much Russia charges for its oil, it can control services needed to move Russian oil around the world. Under current price sanctions, Western shipping, insurance and financing can be used to ship and sell Russian crude oil only if the price is \u003Ca href=\u0022https:\/\/sanctionsnews.bakermckenzie.com\/g7-sets-price-cap-for-russian-oil-at-usd-60-per-barrel\/\u0022\u003Ebelow $60 per barrel\u003C\/a\u003E.\u003C\/p\u003E\u003Cp\u003ERussia\u2019s oil industry is dominated by government-controlled companies whose \u003Ca href=\u0022https:\/\/www.bbc.com\/news\/articles\/c4g6xgv1n41o\u0022\u003Eleaders maintain close ties\u003C\/a\u003E to President Vladimir Putin. The dealings of those shadowy figures are often shrouded in secrecy, but it is likely that \u003Ca href=\u0022https:\/\/www.reuters.com\/investigates\/section\/comrade-capitalism\/\u0022\u003Ethey and Putin\u2019s military-industrial complex\u003C\/a\u003E \u2013 not the Russian people \u2013 are the main beneficiaries of high oil prices.\u003C\/p\u003E\u003Ch2\u003E\u003Cstrong\u003EWhat this means for you\u003C\/strong\u003E\u003C\/h2\u003E\u003Cp\u003EEveryday U.S. consumers may not like the idea of their hard-earned cash going into the \u003Ca href=\u0022https:\/\/www.tu.no\/artikler\/the-10-wealthiest-people-in-the-oil-industry\/231147\u0022\u003Ealready deep pockets\u003C\/a\u003E of any of these groups. But in the short run, there\u2019s not much to do but pay the price. For the long run, however, people around the world are already thinking and talking about, and opting for, sources of energy that \u003Ca href=\u0022https:\/\/theconversation.com\/us-is-less-prone-to-oil-price-shocks-than-in-past-decades-277709\u0022\u003Edon\u2019t depend on fossil fuels\u003C\/a\u003E.\u003C\/p\u003E\u003Cp\u003E\u003Cem\u003EThis article is republished from \u003C\/em\u003E\u003Ca href=\u0022https:\/\/theconversation.com\/\u0022\u003E\u003Cem\u003E\u003Cstrong\u003EThe Conversation\u003C\/strong\u003E\u003C\/em\u003E\u003C\/a\u003E\u003Cem\u003E under a Creative Commons license. Read the \u003C\/em\u003E\u003Ca href=\u0022https:\/\/theconversation.com\/when-oil-prices-spike-where-does-the-money-go-280763\u0022\u003E\u003Cem\u003E\u003Cstrong\u003Eoriginal article\u003C\/strong\u003E\u003C\/em\u003E\u003C\/a\u003E\u003Cem\u003E.\u003C\/em\u003E\u003C\/p\u003E","summary":"","format":"limited_html"}],"field_subtitle":"","field_summary":[{"value":"\u003Cp\u003EThe market for oil is global, which is why events like the war in Iran affect oil prices \u2013 and prices of the wide range of products made from oil \u2013 literally everywhere. Federal data shows that the price at the primary crude oil hub in the U.S. \u003Ca href=\u0022https:\/\/www.eia.gov\/dnav\/pet\/hist\/RWTCD.htm\u0022\u003Ewas US$66 a barrel in late February 2026\u003C\/a\u003E \u2013 before the U.S. and Israel attacked Iran \u2013 and $101 a barrel on April 13. \u003Ca href=\u0022https:\/\/www.npr.org\/2026\/04\/09\/nx-s1-5745144\/oil-company-profits-high-oil-prices\u0022\u003ESimilar price increases\u003C\/a\u003E have reverberated around the globe.\u003C\/p\u003E\u003Cp\u003EAs an \u003Ca href=\u0022https:\/\/scholar.google.com\/citations?user=WhCSHYkAAAAJ\u0026amp;hl=en\u0026amp;oi=ao\u0022\u003Eenergy economist\u003C\/a\u003E and an \u003Ca href=\u0022https:\/\/scholar.google.com\/citations?user=p4hJf78AAAAJ\u0026amp;hl=en\u0022\u003Einternational trade economist\u003C\/a\u003E, we field a lot of questions during such episodes, because when oil prices go up, manufacturers, businesses and ultimately \u003Ca href=\u0022https:\/\/theconversation.com\/soaring-gas-prices-and-disrupted-supply-chains-will-ripple-out-to-increase-costs-in-every-store-and-sector-of-the-economy-278349\u0022\u003Econsumers pay more\u003C\/a\u003E.\u003C\/p\u003E\u003Cp\u003EEveryday U.S. consumers may not like the idea of their hard-earned cash going into the \u003Ca href=\u0022https:\/\/www.tu.no\/artikler\/the-10-wealthiest-people-in-the-oil-industry\/231147\u0022\u003Ealready deep pockets\u003C\/a\u003E of any of the oil-producing groups. But in the short run, there\u2019s not much to do but pay the price. For the long run, however, people around the world are already thinking and talking about, and opting for, sources of energy that \u003Ca href=\u0022https:\/\/theconversation.com\/us-is-less-prone-to-oil-price-shocks-than-in-past-decades-277709\u0022\u003Edon\u2019t depend on fossil fuels\u003C\/a\u003E.\u003C\/p\u003E","format":"limited_html"}],"field_summary_sentence":[{"value":"Georgia Tech\u2013affiliated energy and trade economists describe how higher oil prices don\u2019t just hurt consumers\u2014they also shift enormous amounts of money to oil producers, with impacts varying by region, ownership, and government policy."}],"uid":"36413","created_gmt":"2026-05-07 20:10:19","changed_gmt":"2026-05-07 20:20:00","author":"pdevarajan3","boilerplate_text":"","field_publication":"","field_article_url":"","location":"Atlanta, GA","dateline":{"date":"2026-04-20T00:00:00-04:00","iso_date":"2026-04-20T00:00:00-04:00","tz":"America\/New_York"},"extras":[],"hg_media":{"680221":{"id":"680221","type":"image","title":"file-20260415-71-kc4tq8.jpeg","body":"\u003Cp\u003EIn general, when supply of a product is reduced, prices rise. As a result, even when demand remains stable, the quantity consumers buy decreases because of higher prices. Matthew E. Oliver and Tibor Besede\u0161, \u003Ca href=\u0022http:\/\/creativecommons.org\/licenses\/by-nc-nd\/4.0\/\u0022\u003ECC BY-NC-ND\u003C\/a\u003E\u003Cbr\u003E\u0026nbsp;\u003C\/p\u003E","created":"1778184730","gmt_created":"2026-05-07 20:12:10","changed":"1778184730","gmt_changed":"2026-05-07 20:12:10","alt":"Graph showing supply demand of crude oil with price plotted in the Y axis and quantity in million barrels per day in the X axis during the months of Feb-April 2026.","file":{"fid":"264465","name":"file-20260415-71-kc4tq8.jpeg","image_path":"\/sites\/default\/files\/2026\/05\/07\/file-20260415-71-kc4tq8.jpeg","image_full_path":"http:\/\/hg.gatech.edu\/\/sites\/default\/files\/2026\/05\/07\/file-20260415-71-kc4tq8.jpeg","mime":"image\/jpeg","size":115393,"path_740":"http:\/\/hg.gatech.edu\/sites\/default\/files\/styles\/740xx_scale\/public\/2026\/05\/07\/file-20260415-71-kc4tq8.jpeg?itok=T4qXe3oZ"}},"680222":{"id":"680222","type":"image","title":"file-20260416-63-ul6ilw.jpeg","body":"\u003Cp\u003EA satellite photo shows damage from the war at Saudi Arabia\u2019s Ras Tanura oil refinery, which must be repaired before full operations can resume. \u003Ca href=\u0022https:\/\/www.gettyimages.com\/detail\/news-photo\/vantor-satellite-image-shows-the-damaged-sections-and-burnt-news-photo\/2263898268\u0022\u003ESatellite image (c) 2026 Vantor via Getty Images\u003C\/a\u003E\u003C\/p\u003E","created":"1778184836","gmt_created":"2026-05-07 20:13:56","changed":"1778184836","gmt_changed":"2026-05-07 20:13:56","alt":"A satellite photo shows damage from the war at Saudi Arabia\u2019s Ras Tanura oil refinery, which must be repaired before full operations can resume. Satellite image (c) 2026 Vantor via Getty Images","file":{"fid":"264466","name":"file-20260416-63-ul6ilw.jpeg","image_path":"\/sites\/default\/files\/2026\/05\/07\/file-20260416-63-ul6ilw.jpeg","image_full_path":"http:\/\/hg.gatech.edu\/\/sites\/default\/files\/2026\/05\/07\/file-20260416-63-ul6ilw.jpeg","mime":"image\/jpeg","size":869181,"path_740":"http:\/\/hg.gatech.edu\/sites\/default\/files\/styles\/740xx_scale\/public\/2026\/05\/07\/file-20260416-63-ul6ilw.jpeg?itok=t6bc4Mxq"}},"680223":{"id":"680223","type":"image","title":"file-20260416-63-4z9v13.jpeg","body":"\u003Cp\u003EDrilling rigs in the North Sea are still operating and shipping oil. \u003Ca href=\u0022https:\/\/newsroom.ap.org\/detail\/DenmarkCarbonCapture\/9c2bf7ede3bf4f4b9a938934131da66d\/photo\u0022\u003EAP Photo\/James Brooks\u003C\/a\u003E\u003C\/p\u003E","created":"1778184879","gmt_created":"2026-05-07 20:14:39","changed":"1778184879","gmt_changed":"2026-05-07 20:14:39","alt":"Drilling rigs in the North Sea. AP Photo\/James Brooks","file":{"fid":"264467","name":"file-20260416-63-4z9v13.jpeg","image_path":"\/sites\/default\/files\/2026\/05\/07\/file-20260416-63-4z9v13.jpeg","image_full_path":"http:\/\/hg.gatech.edu\/\/sites\/default\/files\/2026\/05\/07\/file-20260416-63-4z9v13.jpeg","mime":"image\/jpeg","size":249017,"path_740":"http:\/\/hg.gatech.edu\/sites\/default\/files\/styles\/740xx_scale\/public\/2026\/05\/07\/file-20260416-63-4z9v13.jpeg?itok=7sBRd-Bu"}}},"media_ids":["680221","680222","680223"],"related_links":[{"url":"https:\/\/theconversation.com\/when-oil-prices-spike-where-does-the-money-go-280763","title":"Original Article on The Conversation"}],"groups":[{"id":"1188","name":"Research Horizons"},{"id":"367481","name":"SEI Energy"},{"id":"1280","name":"Strategic Energy Institute"}],"categories":[{"id":"131","name":"Economic Development and Policy"},{"id":"144","name":"Energy"},{"id":"151","name":"Policy, Social Sciences, and Liberal Arts"},{"id":"135","name":"Research"}],"keywords":[{"id":"186858","name":"go-sei"},{"id":"187915","name":"go-researchnews"}],"core_research_areas":[{"id":"39531","name":"Energy and Sustainable Infrastructure"},{"id":"39511","name":"Public Service, Leadership, and Policy"}],"news_room_topics":[],"event_categories":[],"invited_audience":[],"affiliations":[],"classification":[],"areas_of_expertise":[],"news_and_recent_appearances":[],"phone":[],"contact":[{"value":"\u003Ch5\u003EAuthors\u003C\/h5\u003E\u003Cp\u003E\u003Cbr\u003E\u003Ca href=\u0022https:\/\/theconversation.com\/profiles\/matthew-e-oliver-2656330\u0022 rel=\u0022author\u0022\u003E\u003Cstrong\u003EMatthew E. Oliver\u003C\/strong\u003E\u003C\/a\u003E\u003Cbr\u003EAssociate Professor of Economics, Georgia Institute of Technology\u003C\/p\u003E\u003Cp\u003E\u003Ca href=\u0022https:\/\/theconversation.com\/profiles\/tibor-besedes-2656327\u0022 rel=\u0022author\u0022\u003E\u003Cstrong\u003ETibor Besede\u0161\u003C\/strong\u003E\u003C\/a\u003E\u003Cbr\u003EProfessor of Economics, Georgia Institute of Technology\u003C\/p\u003E\u003Ch5\u003EMedia Contact\u003C\/h5\u003E\u003Cp\u003EShelley Wunder-Smith\u003Cbr\u003E\u003Ca href=\u0022mailto:shelley.wunder-smith@research.gatech.edu\u0022\u003E\u003Cstrong\u003Eshelley.wunder-smith@research.gatech.edu\u003C\/strong\u003E\u003C\/a\u003E\u003C\/p\u003E","format":"limited_html"}],"email":["shelley.wunder-smith@research.gatech.edu"],"slides":[],"orientation":[],"userdata":""}}}