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ii This is a study about the growth of oil industry and its economic and political repercussions in Brazil. It combines an industrial analysis with an empirical assessment of the impact of oil royalties on municipal fiscal transparency in Brazil. This paper begins with an overview of the future of the oil industry and fleshes out what Brazil’s role in this future might be. I show that hydrocarbons will continue to be the main source of energy for the foreseeable future. Despite the negative issues associated with oil, such as its pollutant qualities and abundance in politically unstable countries, its versatile nature and features as a fuel discourage a switch to alternative energies, a very arduous endeavor under present technological constraints. Next, opposing views regarding the dominance of oil are presented. Some scientists defend that oil production has or is about to peak, while others claim that there is plenty of oil left in unconventional sources, such as tar sands, shale rocks, and offshore oil. This latter source is of particular interest to this study. In 2007, the Brazilian government announced the discover