Energy plays a central role in the Russian economy and in Russian politics. Russia holds the world's largest natural gas reserves, the second largest coal reserves, and the eighth largest oil reserves. Russia also has a significant electricity sector. These energy resources had always been a significant part of the Soviet Union?s economic might and continue to support the Russian economy. Energy exports have been a major driver of economic growth, and have allowed Russia to transform itself from a declining military power into a new energy superpower. This type of growth, however, has made the Russian economy dependent on oil and natural gas exports and vulnerable to fluctuations in oil prices. Because the Russian economy continues to rely on energy exports, it appears that Russia is not adjusting to the shifting world dynamics of energy production and consumption. Russia?s failure to diversify its economy and invest significantly in alternative energy may prevent it from being internationally competitive in the future.