A very important question: How are oil and gas rents used?

When oil and natural gas prices rise, producing countries (and oil companies) extract a rent that is equal to the difference between the market price (normally equal to the marginal cost of production) and the average cost of production. An important question for the global economy is how th e s e rent s are used. Do producer countries and oil and gas companies use it to: Consume, increasing the country’s standard of living; Accumulate reserves (for countries) or remunerate shareholders (for oil companies); Invest in oil and gas or in other, diversified investments? We find that when oil and gas prices are high: OPEC countries partly build up reserves and partly invest and consume; Since 2010, Russia has only built up reserves; Since 2012, oil and gas companies have primarily increased their share buybacks (there has also been a small increase in investment in renewable energies).