HOW FOSSIL FUELS ARE DRAINING HOUSEHOLDS AND ECONOMIES

Every time fuel prices surge, governments across the world repeat the same explanation: it’s a global crisis beyond anyone’s control. Wars erupt, supply chains collapse, oil prices skyrocket, and households are told to brace for impact. But a new report challenges that narrative and argues that the current energy crisis is not simply bad luck or an unavoidable consequence of geopolitics. Instead, it is the predictable outcome of a fossil fuel system deliberately built to benefit a small group of corporations while shifting the costs onto ordinary people.

The ongoing war in South West Asia, commonly referred to as the Middle East, has once again exposed just how fragile and unfair the global energy system really is. Oil and gas prices have surged dramatically, creating economic pressure on households and governments from Pakistan and South Africa to the United States and Europe. Food prices are rising, transportation costs are climbing, inflation is worsening, and public finances are being squeezed.

Yet while millions struggle to afford basic necessities, major fossil fuel companies are recording enormous profits.

Ordinary People Are Paying Three Times Over

According to the report, households are effectively paying for fossil fuels in three different ways.

The first payment comes through taxes. Governments around the world continue to spend vast amounts of public money subsidising fossil fuels in the name of protecting consumers. However, the benefits are distributed unevenly. Only a tiny portion of those subsidies actually reaches the poorest households, while wealthier individuals and corporations capture most of the financial advantage.

The second payment comes directly through rising living costs. Every time a war, embargo, or supply disruption causes oil prices to spike, households in energy-importing countries absorb the shock. Fuel becomes more expensive, food prices increase because transportation costs rise, and public transport fares climb higher. For families already living paycheck to paycheck, these sudden increases can be devastating.

The third payment is perhaps the most damaging of all: climate destruction. The floods in Sindh, the droughts in Morocco, and the heatwaves forcing schools to close across East Africa are not isolated natural disasters. They are the long-term consequences of decades of fossil fuel combustion and carbon emissions. And once again, the poorest and most vulnerable communities are the ones suffering the most severe impacts.

The Fossil Fuel Industry Receives Trillions in Hidden Support

The scale of financial support flowing into the fossil fuel industry is staggering. The International Monetary Fund estimates that global fossil fuel subsidies reached approximately US$7.4 trillion in 2024. But according to the report, even that figure significantly underestimates the true cost.

Using updated peer-reviewed climate damage models that now underpin the official social cost of carbon calculations by the United States Environmental Protection Agency, the environmental organisation 350.org recalculated the global impact of fossil fuels across 186 countries.

Their conclusion is alarming: the fossil fuel industry causes at least US$9.3 trillion every year in climate damages and air pollution-related deaths alone, while paying almost nothing for those damages.

When direct government subsidies and tax breaks are included, the total transfer of wealth to the fossil fuel industry rises to around US$12 trillion annually. That amount is more than 60 percent higher than the IMF’s estimate and roughly 100 times greater than the international climate finance that reached developing countries in 2022.

Put another way, the fossil fuel system effectively extracts more than US$1,400 from every person on Earth every year.

Corporations Profit While Households Struggle

One of the most striking findings in the report is how fossil fuel companies continue to profit from crises that hurt ordinary people.

US oil producers alone are expected to gain an additional US$60–63 billion in windfall profits during 2026 because of the current energy crisis. That figure is more than double the amount the International Energy Agency estimates would be required to provide electricity and clean cooking access to every person in Africa.

Meanwhile, families across the Global South are facing electricity rationing, soaring fertilizer prices, and severe food insecurity.

In just the first 50 days of the war in South West Asia, the report estimates that more than US$150 billion was transferred from ordinary households to oil and gas corporations due to soaring energy prices.

And even that figure likely understates the true damage because it does not yet include wider economic consequences such as inflation, reduced economic output, or rising unemployment.

Decades of Political Influence

The report also highlights the enormous political influence wielded by fossil fuel companies over the past several decades.

The industry has funded think tanks, influenced policymakers, and shaped international climate negotiations to ensure that climate commitments appear ambitious while avoiding meaningful structural change.

At COP28, the global climate summit where governments pledged to transition away from fossil fuels, nearly 2,500 fossil fuel lobbyists were officially registered.

The result is a global system in which three quarters of humanity live in countries dependent on importing fossil fuels, leaving them exposed to every geopolitical conflict, supply disruption, and price shock while profits continue flowing toward large corporations and wealthy producing nations.

The Myth That Fossil Fuels Are “Cheap”

For decades, the fossil fuel industry has promoted the idea that oil, gas, and coal provide the cheapest and most reliable form of energy for ordinary people. But according to the report, that belief is largely an illusion carefully maintained through subsidies, political lobbying, and market manipulation.

The report documents stories from communities around the world already paying the real price of fossil fuel dependency.

Families in Sindh are still rebuilding homes destroyed by catastrophic floods in 2022. Households in South Sudan ration electricity beginning at 4 p.m. Farmers in Sri Lanka struggle to afford fertilizer for planting seasons. Communities in La Guajira, Colombia, have sacrificed their land for coal production that will never even supply electricity to their own homes.

In each case, the fossil fuel system is not delivering affordable energy. Instead, it is extracting wealth from households, public budgets, and ecosystems while concentrating profits elsewhere.

Renewable Energy Is No Longer the Expensive Alternative

Public debate often focuses heavily on the upfront cost of clean technologies such as solar panels, electric scooters, home insulation, or clean cookstoves. For low-income households with little savings or limited access to credit, those costs can indeed seem overwhelming.

But far less attention is given to the long-term cost of remaining dependent on fossil fuels.

Meanwhile, renewable energy technologies have become dramatically cheaper over the past decade. In most markets today, solar power, wind energy, and battery storage are already less expensive than building new fossil fuel infrastructure.

The question is no longer whether the energy transition is economically possible. The question is whether societies can continue absorbing the financial and environmental costs of fossil fuel dependence.

Can ordinary families continue to afford food, transportation, housing, and healthcare in a world shaped by increasingly destructive climate events and unstable fossil fuel prices?

The Cost of Delay Is Growing

The economic consequences of climate change are already enormous. Globally, climate-related extreme weather events have caused more than US$2 trillion in damages over the last decade. Some vulnerable countries have experienced single disasters costing more than their annual GDP.

At the same time, the solutions already exist. Renewable energy is available, scalable, and increasingly affordable.

What remains missing is political will.

As world leaders gather in Santa Marta for the first international conference dedicated to phasing out fossil fuels, the world faces a defining choice. Governments can either continue supporting a system that silently transfers trillions away from households and public budgets, or they can accelerate the transition toward cleaner, more stable, and more affordable energy systems.

https://350.org/wp-content/uploads/2026/04/Out-Report-Pocket-Full-Report.pdf