The six Persian Gulf monarchies are home to some of the world's largest hydrocarbon reserves, and also some of the cheapest energy prices and highest percapita consumption. Government subsidies based on socio-political objectives have contributed to regime longevity, but they have also stimulated demand for resources comprising the region's chief export and biggest contributor to GDP. This paper finds that these monarchies -Qatar excepted -face an increasingly acute conflict between maintaining subsidies and sustaining exports. A shift to a higher-cost model of energy provision is underway. The era when primary energy was considered nearly free is being eclipsed by one where new sources of demand are met by more expensive resources. For now, governments have absorbed the increased costs. Consumers have been insulated from higher prices. This counterproductive practice only intensifies the call on exportable resources. The choice for regimes is one of short-term political stability versus longer term economic sustainability. As energy production reaches a plateau, domestic consumption will gradually displace exports. Politically difficult reforms that moderate consumption can therefore extend the longevity of exports, and perhaps, the regimes themselves.

Burning coal, oil, and natural gas is the source of two-thirds of the world's emissions of greenhouse gases. Sales of these fuels also represent the economic underpinning of resource-rich countries and the world's largest firms. As such, steps taken to abate emissions undermine commercial opportunities to monetize fossil fuel reserves. Risks to the industry correlate with progress on climate goals.This article analyzes recent literature on climate action strategy and finds that a new or intensified set of risks has arisen for the fossil fuel industry. These include government policies and legislation, financial restrictions among lenders and insurers, hostile legal and shareholder actions, changes in demand and geopolitics, as well as the onset of new competitive forces among states and technologies.The exposure of carbon-based businesses to these risks and the potential for loss is neither distributed uniformly across the sector, nor adheres to a uniform time scale. Shareholder-owned firms in the developed world will be incentivized to react sooner than large state-owned resource owners in developing countries. The fates of the three fossil fuels also appear likely to play out differently. Demand for oil appears insulated by its lack of viable substitutes, while coal businesses are already undergoing climate-related action, pushed by decreasing social acceptance and constraining financial regulation. At the other end of the spectrum, climate action has improved the medium-term viability of low-carbon natural gas. What appears clear is that, as effects of climate change grow more pronounced, the industry faces a future that is less accepting of current practices.

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