Canada’s drive to become a full-fledged petro state will leave the country with “a rapidly declining Canadian dollar, greater problems over pipelines, the reduction of future investments, and a very bumpy oil ride, especially for Alberta,” Stanford researcher Terry Lynn Karl tells The Tyee in this fascinating and wide-ranging year-end interview.
“Any adverse effect low oil prices will have on Canada’s high cost oil industry will have a multiplier effect on the economy and polity,” said Karl, who coined the term “petro state” after interviewing OPEC founder Juan Pablo Perez Alfonzo in 1976. “Government services will be cut back, house sales will decline, and banking will slow down. Canadians will not be so happy with their government.”
Karl identifies several differences between petro states and other countries: “Their dependence on oil profits breaks the necessary link between taxation and representation,” Nikiforuk writes. “This makes governments unaccountable; it means that people don’t demand to see how money is spent.”
And “although petro states appear strong, and some governments last for long periods of time, these oil-infused regimes are highly vulnerable. When they collapse, they fall apart very quickly. Neither autocracies nor democracies are immune.”