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How Norway has avoided the 'curse of oil'

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

#91

Post by adventured »

makmanalp wrote: post #52

There is also the related concept of "Dutch Disease" ( http://en.wikipedia.org/wiki/Dutch_disease ) which is what I expected this would be about. The idea is that once a country discovers it has reserves of a valuable natural resource, it tends to exploit and build its economy around that resource, at the expense of its more complex sectors like manufacturing. Norway seems to have handled that decently well so far, a…

I know a lot of people talk up Norway, but I'm not aware of anything that Norway does economically that matters outside of energy production.

What great technology, companies, etc. have they produced in the last 40 years? What big innovations come out of Norway? Do they have the top universities in the world?

They've only won two nobel prizes since oil became the center of their economy, and they became rich. They won four in the 1920s, and four between 1968 and 1973. The oil wealth sure doesn't seem to have spurred great knowledge acquisition.

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

#92

Post by k__ »

sliverstorm wrote: post #87
k__ wrote: post #47

Earlier quoted context omitted.

In Germany we don't got this right, but seldom I have been prohibited from "roaming" the landside. But we aren't allowed to put a tent anywhere and sleep in it, which is rather sad. A friend of mine went on a hiking holiday in Scotland and he told me, he just walked till he was tired, put his tent up on the next green spot and slept there.

we aren't allowed to put a tent anywhere and sleep in it, which is rather sad Probably connected to the risk that squatter's rights poses to the land owner... not that pitching a tent for a night is a serious risk, but squatter's rights really encourages that kind of culture.

Yes, owning land is a big problem in all countries.

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

#93

Post by eropple »

tomelders wrote: post #67
jonpacker wrote: post #64

Earlier quoted context omitted.

Minke whales are not in any way endangered (or close to it). Check your facts. https://en.wikipedia.org/wiki/Minke_whale

Yet. I take the view that the human race should only be harvesting things it really needs. The case for whaling (that I'm aware of) seems pretty weak. And if Norway did sign up to protect marine wildlife in exchange for oil rights (I'm taking that at face value at the moment) then it does seem like a jerk move to take the oil and not protect the whales.

"Protect marine wildlife" is not the same thing as "ban harvesting of a species that is not endangered."

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

#94

Post by cylinder »

prawn wrote: post #9

Statoil and how Norway essentially protected its future is a lot like how Australia should have dealt with the so-called mining boom. Named and outlined better, our "mining tax" could have been this. It could have protected against capital flight and essentially built national strength for all at the expense of those (especially foreign interests) looking to dig up serious swathes of our ground. Instead, we had a pre…

Australia is basically like many African nations, where foreigners run the resources sector and the locals hope to get a piece of the pie through employment/wages.

However, Norway's resources are completely different to Australia's. Norway knows where the oil is, they just have to dig it up. So, they can just have a state-owned company pump it out of the sea and keep the profits for themselves.

OTOH Australia's minerals are hidden across a barren landscape the size of the continental USA. Projects are very speculative and require huge investments. New discoveries are being made every year all across the continent.

Hancock Prospecting (company now owned heiress Gina Reinhart, one of the richest women in the world) was created when its founder crashed a personal plane somewhere in the outback and discovered resources in the dirt (or something like that).

Even when you do know where the stuff is, tens of billions often need to be invested before anything is produced, like the new LNG wave.

There is no way the 23 million Australian citizens could invest this kind of capital into speculative projects. One failed project would bankrupt the nation. So, foreign investment is required.

But, even with minimal resource taxation/royalties, Australia is becoming uncompetitive for many resource investments, with the AUD and commodity prices where they are. Iron ore at its current price is now unprofitable, basically. As well all know, corporations require a certain ROE to do anything. Nobody is going to risk $10 billion for a possible 1% return. Massive LNG projects are getting shelved left and right.

There's oil hidden all across Australia and her waters, too, but there is very little infrastructure in place such as pipelines to transport the product to terminals/refineries, like there is in the US. If Australia was to nationalize its oil industry, would its people be willing to shell out tens of billions of their own tax dollars to build this infrastructure? All speculatively, knowing that their type of oil production is not profitable at all if oil once again goes below $70 a barrel, which could happen overnight (see Sept-Nov 2008)?

While I could see some sectors of the resource industry being nationalized, broadly it's just not sustainable. With costs where they are, there isn't a ton of room for more royalties.

Best thing would be for policymakers to just move on from relying on mining and start focusing on educating the population and competing where it counts on the global stage.

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

#95

Post by angersock »

adventured wrote: post #88

The oil curse is a silly notion. The US and Canada have both avoided any 'curse.' China is the world's 5th largest oil producer, it too is certainly not cursed by oil. Norway however has a huge problem coming, soon. Their oil production is running out rapidly: http://i.imgur.com/UlR1B0a.jpg It has fallen about 40% in a decade +/-. Even with their large sovereign fund, they will exhaust that quickly if the oil product…

The US and Canada have both avoided any 'curse'.

Erm, consider the massive amount of environmental and policy issues that we've had due specifically to oil. Had we not had so much of it in the early 20th century, we probably wouldn't have had the automobile boom of today and the long-term sabotage of public transportation.

There's a curse, all right.

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

#96

Post by 67726e »

hkarthik wrote: post #80
sgt wrote: post #71

Earlier quoted context omitted.

Whaling is a tradition in Norway and has been going on since medieval times. More information: http://www.fisheries.no/ecosystems-and-stocks/marine_stocks/... In my view, whalers are decent people - they generally aren't "jerks". You probably have never even talked to nor met any one of them. I understand your point that hunting and farming of animals in general is not good, but it's a pretty hard habit to break. Thi…

> Whaling is a tradition in Norway and has been going on since medieval times. Jumping in a longboat and pillaging neighboring villages was also a Norwegian tradition in medieval times, but we find such practices barbaric today.

Eh, depends on how you frame it. Is a troop transport taking US forces over to Iraq barbaric? Depends on who you ask.

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

#97

Post by cylinder »

noir_lord wrote: post #42

I've often said the Nordic countries in general are as close to a Star Trek style civilisation as we've ever gotten. As someone who lives in America Lite (the UK) your policies on just about everything strike me as insanely reasonable. I pretty much feel shame whenever I think about our last two governments.

Is there freedom of movement for UK citizens into Nordic countries? If not, is the migration process hard or easy?

If it's simple, why not move there yourself?

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

#98

Post by netcan »

chii wrote: post #50
netcan wrote: post #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 p…

> Politicians definitely don't want to be investing during their term for the benefit of politicians 10 years from now. you've hit the nail - short term gains vs long term losses. What you need is some mechanism to make it so that the long term benefits align with the benefits of the politician - for example, the project(s) you start stays with you, even after you're term is over.

One nail perhaps.

There are a lot of forces at play and real-politic cynicism is one of them, not always one of the biggest.

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

#99

Post by digikata »

flyinghamster wrote: post #79
Veinlash wrote: post #13

Earlier quoted context omitted.

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…

That's a classic "Tragedy of the Commons" scenario. The electric car benefits are great when only a few are on the road, but when everyone gets one it turns into a problem. That will become a problem in the US as well, since US highway construction and maintenance is mostly funded from motor fuel taxes.

Highway maintenance is already a problem in the US, but not because of electric vehicles, it's from increasing efficiency of fossil fuel vehicles and the political refusal to raise fuel taxes to balance the maintenance costs with the tax revenue from fuel. If electric vehicles do become a significant proportion of vehicles on the road, the pragmatic thing to do would be to charge for mileage based on the odometer and vehicle weight.

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

#100

Post by aragot »

prawn wrote: post #9

Statoil and how Norway essentially protected its future is a lot like how Australia should have dealt with the so-called mining boom. Named and outlined better, our "mining tax" could have been this. It could have protected against capital flight and essentially built national strength for all at the expense of those (especially foreign interests) looking to dig up serious swathes of our ground. Instead, we had a pre…

Having lived in Australia for 3 years, I've been surprised their 3 major areas were mining, tourism and international education. Even Syndey's next big bet is to build a huge casino. They sound ephemeral, like just taking the money where it is. Of course they're richer than Europe, but isn't it better to build industrial sectors (I mean transformation industries with know-how) and research?
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