Our research shows that once oil windfalls in Russia are taxed and transferred to the state budgets, they may easily fall prey to the corrupt, politically connected elite, but this unfair redistribution would not go unnoticed by the population and eventually may play its role in the rising political instability. Of course, the central government has put an end to the oil windfalls at the regional level by channeling them into the federal budget, but this does not guarantee a fairer distribution of the natural resource rent and raises even more serious concerns about the potential political capture.