Canada @60....dollars a barrel

The falling world price of oil is concentrating minds everywhere these days. Friday's closing price of US$58.22/barrel represents a 5-year low, the effects of which are being felt unevenly in different parts of the world. Falling prices are a double edged sword. For some, lower energy prices are effectively a tax cut that will improve profitability. For others, dependent on natural resource revenues (especially governments like Russia, and OPEC countries), falling prices are creating serious budget challenges.

According to the International Energy Agency, falling prices are the byproduct of dramatically increased supply from countries like the United States, coupled with a more worrisome decline in global demand and what that says about global economic growth generally.

Yet, the impact of the rapid decline in oil prices on Canada is another sobering reminder of the country's vulnerability as a major exporter of basic commodities like energy. In his most famous study, The Fur Trade In Canada (1930), Harold Innis described Canada's perpetual status as a resource economy, and Canadians themselves as the "hewers of wood and drawers of water." Indeed, while Canada might be firmly entrenched in the ranks of rich, industrial economies, the parallels with developing economies dependent on natural resources are hard to ignore.