Petroleum paradox and the cost of dependence: How global oil conflicts fast-tracking nuclear and renewable transition

George Halkos and Argyro Zisiadou

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the “Petroleum Paradox", wherein legacy hydrocarbon reliance has shifted from an engine of industrial growth into a primary vector of macroeconomic instability and geopolitical exposure for importing nations. As contemporary conflicts collapse traditional paradigms of "complex interdependence", this study evaluates two distinct energy shocks: the fixed-infrastructure pipeline crisis of the Russo-Ukrainian War and the elastic maritime chokepoint crisis of the US-Israel-Iran conflict. To combat the resulting "fossilflation", price volatility taxes and severe balance of payments strains, global capital is executing a strategy of Dependency Inversion, re-engineering national energy architectures to convert uncontrollable foreign operational risks into secure, domestic capital assets. Ultimately, this paper demonstrates that modern hybrid warfare, rather than ecological mandates alone, acts as the primary structural accelerator of the energy transition. This pathway bifurcates into a highly strategic, dual-pronged domestic regime: decentralized, variable renewable networks acting as an agile security shield, and high-capacity nuclear infrastructure (incorporating gigawatt-scale and small modular reactors) serving as a weather-independent base load anchor to permanently secure national sovereignty and macroeconomic stability.

Keywords: Energy security; energy crisis; petroleum paradox; geopolitical risk premium. (search for similar items in EconPapers)
JEL-codes: E32 F51 Q34 Q42 Q43 Q48 (search for similar items in EconPapers)
Date: 2026-06-18
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