PETRO
STATE
The ascent and zenith of the petro-state
Image by kotkoa on Freepik
I started analysing commodity markets and energy policies in the early 2000s when the circumstances were vastly different from today’s situation. Back then, the entire global club of petro-states was – as we used to say – “drunk on oil”. Just before the financial crisis, the price of crude reached a record level of $140 per barrel. Many were convinced that prices would reach $200 per barrel, and from there it was no great leap to $300!
Essentially, a lot of my research since then (including the report “Curse or Blessing? How Institutions Determine Success in Resource-Rich Economies”) addresses the following question: what brought about the ascent, zenith and consequent stagnation of the petro-state model? I argued that institutional deficiency in resource economies perpetuates rent‐seeking, autocracy, and slower economic growth, as illustrated by multiple unfortunate examples.
 
PETRO
STATE
The ascent and zenith of the petro-state
Essentially, a lot of my research since then (including the report “Curse or Blessing? How Institutions Determine Success in Resource-Rich Economies”) addresses the following question: what brought about the ascent, zenith and consequent stagnation of the petro-state model? I argued that institutional deficiency in resource economies perpetuates rent‐seeking, autocracy, and slower economic growth, as illustrated by multiple unfortunate examples.
I started analysing commodity markets and energy policies in the early 2000s when the circumstances were vastly different from today’s situation. Back then, the entire global club of petro-states was – as we used to say – “drunk on oil”. Just before the financial crisis, the price of crude reached a record level of $140 per barrel. Many were convinced that prices would reach $200 per barrel, and from there it was no great leap to $300!
Image by kotkoa on Freepik
Even Saudi Arabia introduced some partial social reforms and attempted to diversify away from oil and build solar-powered smart cities in the middle of the desert.
The oil “bear market”
In the first decade of the 21st century, high oil prices served to prop up inefficiencies in public administration in a number of oil economies. However, things started to change in 2014 with the most significant decline in oil prices since the 1980s. The oil “bear market” lasted for half a decade and brought about some profound social changes — a kind of political polarisation and bifurcation across hydrocarbon economies. With lower export revenues, some of them were forced to undergo liberalisation (albeit on a limited scale) — among them were, for example, Nigeria and Malaysia, which both saw a democratic replacement of government.
With lower export revenues, some of them were forced to undergo liberalisation (albeit on a limited scale) — among them were, for example, Nigeria and Malaysia, which both saw a democratic replacement of government. Even Saudi Arabia introduced some partial social reforms and attempted to diversify away from oil and build solar-powered smart cities in the middle of the desert.
The oil
“bear market”
In the first decade of the 21st century, high oil prices served to prop up inefficiencies in public administration in a number of oil economies. However, things started to change in 2014 with the most significant decline in oil prices since the 1980s. The oil “bear market” lasted for half a decade and brought about some profound social changes — a kind of political polarisation and bifurcation across hydrocarbon economies.
The most notable and menacing of them is the case of Putin’s Russia, where a slide towards reaction culminated in a political gamble of previously unimaginable magnitude — the war against Ukraine. Apart from the humanitarian catastrophe caused by the invasion, it triggered a chain reaction across the world, giving rise to higher commodity prices and tighter supplies, especially of gas to Europe (a topic explored in a paper published soon after the war started in 2022).
Putin’s war
in Ukraine
While lower oil prices forced some petro-states to adjust their policies, in others, they triggered institutional deterioration and a further shift to autocracy.
The most notable and menacing of them is the case of Putin’s Russia, where a slide towards reaction culminated in a political gamble of previously unimaginable magnitude — the war against Ukraine. Apart from the humanitarian catastrophe caused by the invasion, it triggered a chain reaction across the world, giving rise to higher commodity prices and tighter supplies, especially of gas to Europe (a topic explored in a paper published soon after the war started in 2022).
Putin’s war
in Ukraine
While lower oil prices forced some petro-states to adjust their policies, in others, they triggered institutional deterioration and a further shift to autocracy.