Saturday 7 August 2004

Pic of the day: Offshore adventures. (Yeah, it's from CoH, but then again you didn't expect me to actually travel to the North Sea to get a picture for you, eh?)

Norway as oil nation

A short introduction for my foreign readers.

While most earthlings have probably never heard about Norway, or at least not noticed, my readers are a smart and generally well educated bunch. Or at least those I've heard from. So most of you have probably noticed that Norway is involved with oil somehow. In fact, we're the world's third largest oil exporter, after Saudi Arabia and Russia. For a while we were number two, before Russia rebuilt itself after the fall of communism.

In a way it is nice to have Russia in the top three, because it kinda breaks the stereotype of oil producing countries as dirt poor third world countries in the pockets of multinational oil companies. Obviously Russia isn't quite like that. Well, neither is Norway.

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Even though oil is one of the most discussed sectors of our economy, the fact is that we would have been one of the world's richest countries (compared to population size) even without it. Before the oil drilling started in the North Sea, Norway was poorer than neighboring Sweden and Denmark, but not by a lot. We were in the same league, fairly affluent by European standards and filthy rich compared to most of the world. It took some time before the investment in oil started to pay off, but by now we're spoiled by a nice surplus each year. Even so, the truth is that our education level contributes more to our prosperity than the oil does. We have the world's best educated work force, for the time being at least, and most people are familiar with computers and internet, as well as each person having a cell phone or two. We really have more in common with Japan and the USA than with Saudi Arabia or even Venezuela.

Oil does not influence Norwegian foreign policy much. We were USA's loyal poodle well before our oil reserves were discovered, as is natural when there live more people of Norwegian ancestry in America than in Norway. In so far as oil has influenced us at all, it is by giving us a puffed-up sense of self-importance, which may be one reason why we never joined the European Union. They are simply not good enough for us; besides, we are richer than they, so we'd have to pay more than our part of the common expenses. I'm sure we would have been eager to join ("we" as a nation, not me personally) if we had been the poor cousin. It's not a big deal anyway, since we have a deal with the EU to implement nearly all of their rules so as to keep a level field of trade.

While foreign oil companies are active in the North Sea, there are also Norwegian companies, and the government is taxing both groups heavily. We are certainly not under the thumb of the big multinationals, and their influence on Norwegian politics is minuscule.

Ironically, Norway has a high "carbon tax" on refined oil products, and driving a car is far more expensive here than in the USA. Officially the tax is meant to discourage pointless driving and save the world from greenhouse effect, but in truth it is just another way to grab money from the citizens to play Santa Claus with. People drive pretty much the same as they did before, or as they do in comparable countries. In fact, the large distances in our sparsely populated country makes driving a car more necessary than in most of Europe.

However, partly because of the high oil tax and partly because of a slow drift towards the right politically, Norway has lower corporate and personal taxes than neighboring countries. We are in the middle of the OECD (developed world) pack, but of course much higher than the USA. Then again, Norwegian taxes include stuff that is theoretically optional in America but in practice necessary, such as pension savings and health plans. When all is added and subtracted, we have more left to spend than our American relatives, and there is barely any poverty at all.

It would be nice if other oil exporting nations could follow the same path, but this is unlikely. Norway had a long history of democracy and rule of law before we even suspected there might be oil under the sea bottom. These things are not implemented overnight. There was no ruling class or race or tribe to make a deal with and keep the peasants down. Which just goes to show, you never know what riches may be found in your country, so you better get your social structure in place before it happens. Afterwards it may be too late.