Live data from Hacker News

How Norway has avoided the 'curse of oil'

bbc.com

21–30 of 146 posts

Re: How Norway has avoided the 'curse of oil'

#21
The economics of mining are complicated, but there are some similarities to the startup/VC complex. A big part of developing mines is exploration. Finding minerals can be hard, especially in the north sea. The oceans are big. The difficulty is why there are still new deposits being discovered.

Exploration usually happens when the company doing it can hope to make money off of a successful discovery. They might even pay for the privilege. Imagine a scenario where a company finds a motherload of oil after a low probability exploration. Their exploration contracts (being signed before the deposits were known) guarantees them a huge profit. Unseemly, even. They are earning that because they took a risk. Now they get their 100X. Try explaining that in an election year.

New technologies are constantly being invented that improve exploration, surveying & mining. This means that there are new possibilities every year impacting which mine/well is profitable (minerals can be extracted at a profit. These all change underlying economic realities. A $1bn per year mine can only make a slim profit in years where commodity prices are high. It employs many people. The next year commodity prices change or some new mining or processing technique (fracking is a huge gamechanger) mean that some complicated contract is now worth a whole lot of money. The $1bn goes from a 2% margin ($20m) to a 30% margin ($300m) and everyone want a piece of it.

Meanwhile government departments, unions, armies, etc are salivating over the prospect of this wealth. The National University's long impoverished Oceanography faculty has their eye on a fleet of research vessels. Academics are starting companies offering to do (mandated) environmental impact studies. There is a lot of pressure for money now, from industry, politicians, constituents.

Politicians definitely don't want to be investing during their term for the benefit of politicians 10 years from now. The world can be cynical, but not always.

Norway has done well. I'm not sure if any one thing can be learned from them. Have smart people running things. Meanwhile Norway have their own political traditions, values, and probably pathologies.

Re: How Norway has avoided the 'curse of oil'

#22
Probably one of the best examples of how natural resource wealth has been preserved and invested for the whole nation, instead of being lost to the pockets of few through privatisation, corruption or mismanagement of funds.

I think the magic ingredients (aside from being lucky with natural resources in the first place) are egalitarian society, high level of trust, very low level of corruption, a functioning democratic government and highly skilled fund managers.

Re: How Norway has avoided the 'curse of oil'

#23
post #22

Probably one of the best examples of how natural resource wealth has been preserved and invested for the whole nation, instead of being lost to the pockets of few through privatisation, corruption or mismanagement of funds. I think the magic ingredients (aside from being lucky with natural resources in the first place) are egalitarian society, high level of trust, very low level of corruption, a functioning democrati…

Another Norwegian here. I think you are right. The high level of education also helps. But it was actually an Iraqian immigrant named Farouk al-Kasim that proposed the laws to protect Norways natural oil and gas resources.

Further reading: http://www.ft.com/cms/s/0/99680a04-92a0-11de-b63b-00144feabd...

Re: How Norway has avoided the 'curse of oil'

#24
post #19

Since we're talking about how awesome Norway is, this [0] should be mentioned. [0] https://en.wikipedia.org/wiki/Freedom_to_roam#Norway

It's an awesome right.

As a Finn I always find it really weird when visiting places outside Nordic Countries that for them most of the country is unaccessible.

Re: How Norway has avoided the 'curse of oil'

#25
post #22

Probably one of the best examples of how natural resource wealth has been preserved and invested for the whole nation, instead of being lost to the pockets of few through privatisation, corruption or mismanagement of funds. I think the magic ingredients (aside from being lucky with natural resources in the first place) are egalitarian society, high level of trust, very low level of corruption, a functioning democrati…

Another Norwegian here. I think you are right. The high level of education also helps. But it was actually an Iraqian immigrant named Farouk al-Kasim that proposed the laws to protect Norways natural oil and gas resources. Further reading: http://www.ft.com/cms/s/0/99680a04-92a0-11de-b63b-00144feabd...

Finnish, not Norwegian - I think you guys have done great.

Read the story of Farouk al-Kasim a few months ago, fascinating. It does seem like a stroke of luck that the right people were there in the beginning. His nationality is both ironic and sad considering where Iraq is today

Re: How Norway has avoided the 'curse of oil'

#26
Kinda ironic having the picture of the current finance minister, Siv Jensen, there, as she is so opposed to us saving this money. She is mainly elected on promises on lower immigration, cheaper alcohol, cheaper fuel and lower taxes. Planning to achieve that by using the fund's money.

Re: How Norway has avoided the 'curse of oil'

#28
post #8

Earlier quoted context omitted.

The Tesla isn't priced as a luxury car in Norway. Electric vehicles are exempt from taxes and fees, which is mostly where the money goes when you buy a more traditional vehicle. They also don't pay anything when passing toll booths, IIRC. Where I grew up, people now pay ~$10 just to pass toll booths to and from work every day. There are other benefits as well, like free parking, Tesla's free charging station--and mos…

All of this is indeed correct. People here don't buy Teslas or other electronic cars because of the environment. Most do it for the economical reasons listed above [1]. However there has been a lot of discussion recently about whether these economical advantages are here to stay. Currently the electric cars are clogging up the bus/taxi lanes and the government is losing money as a result of the electric car boom we'v…

The clogging of the bus lanes because of electric cars is mostly wrong. It's been a lot in the news, but no one has proven it. They all just point to the correlation of more electric cars in the lanes. Not the correlation with more traffic in general.

The clogging happens because every car wanting to get on or leave the highway has to cross the bus lane. It's easy to see for yourself.

Re: How Norway has avoided the 'curse of oil'

#29
post #8

Earlier quoted context omitted.

The Tesla isn't priced as a luxury car in Norway. Electric vehicles are exempt from taxes and fees, which is mostly where the money goes when you buy a more traditional vehicle. They also don't pay anything when passing toll booths, IIRC. Where I grew up, people now pay ~$10 just to pass toll booths to and from work every day. There are other benefits as well, like free parking, Tesla's free charging station--and mos…

The last benefit actually is starting to become a problem, since so many people have gotten Teslas. There's a lot of traffic in the bus lane, as electric cars, buses and taxis fight for the same spaces.

I suppose it will eventually be taken away. It's a nice temporary incentive but it obviously cannot scale.

Re: How Norway has avoided the 'curse of oil'

#30
post #22

Probably one of the best examples of how natural resource wealth has been preserved and invested for the whole nation, instead of being lost to the pockets of few through privatisation, corruption or mismanagement of funds. I think the magic ingredients (aside from being lucky with natural resources in the first place) are egalitarian society, high level of trust, very low level of corruption, a functioning democrati…

This must really be upsetting for the extreme liberals of the country.

"Public resources being invested sensibly! Horrifying! You can tell that this is an awful idea by looking at how miserable the people of Norway are, and how badly their businesses are doing.

You should liberate yourselves by giving all of it to private interests. That's the definition of freedom!" /end sarcasm

Post reply on HN