Global God of Oil. The norwegian way, part three.

It was all about the energy. Or the power, maybe. Or tension.

However we’d call it, Norway raised from the World War II disaster with the highest economical growth rate and strong drive towards Nordic and Scandinavian regional identity.

As the Cold War developed, however, Norwegian aspirations shifted slightly. The ties with the USA grew stronger and in 1949 from the neutral-ish position Norway changed into one of the founding members on NATO. Being the only of them, with the direct land border with the enemy USSR, and having it’s geostrategical position well proven during the WW2, Norway was very important part of the NATO strategy in Europe. There is still a lot to learn and discover about what was going on here, during the Cold War period.

The country was developing pretty well. Thanks to the Marshall Plan and smart use of the funds provided, both the infrastructure and production sector were growing, The hydroelectricity sector brought power to the aluminium and steel metallurgy, which in turn supplied shipbuilding, machinery construction – and the infrastructure itself. Together with the state-led social reforms, it made living in Norway pretty good, compared to previous periods.

And then the oil happened.

In the middle of the Cold War, just before the dawn of globalisation era, Norway, all of the sudden, become the richest European country, in potentia at least. And immediately, Norwegians had to make a dramatic choice. The majority was pretty ok with the idea of just letting others (big, experienced, international oil firms) extract the oil and gas, while leaving great chunk of their profit in Norway’s Treasury chests. But there was a small group of hard-headed individuals who, supported by warning messages from oil-industry-colonised countries like Iraq and Iran, made the difference. Oil and Gas became Norwegian strategic business. Norway became the biggest petroleum  producer in Europe, and it kept resources away from private industry. Staying away from OPEC cartel, setting own, high standards of safety and environment protection, making the new industry a flagship of economy. The rest of production sector quickly followed – the shipbuilding, the machinery sector, the infrastructure – all that got a boost again.

The Oil Cornucopia

The specifics of Norway is that the oil and gas are not privileged internally. If you fill your tank at the Statoil station, you will pay 15-16 NOK per liter, which is not a cheap price for a country that swims in oil. The influence of being one of petro-powers is much more subtle. Social welfare system, general level of wages, subsidised electricity and great investments in public infrastructure are the most visible signs.

While you may see the lights and electric heaters in many summer cottages being left on for the winter, the number of huge SUVs and gas-guzzling monster cars is quite low – surely well below, say, Texan standards. It is – luckily – probably still working the pietist taboo of flamboyant consumption.

Probably the greatest decision of the Norwegian political class was to create Oljefondet – The Oil Fund. Under rather strong public supervision (becoming more elusive over the time) the surplus of oil money – taxes, mining fees, dividends from state-owned companies) is invested for the future benefits and sustainability “when the money well gets dry”.  It was ingenious as a retention system and very clever as a leverage tool, as all investments were quite profitable.

But can you buy the future?

Four decades of wealth and easy money can break every community’s spine. The proof of the strong Norwegian moral identity is that only few negative influences showed over these years. The major of them is surely the globalisation “osmosis” effect. If you are really, really good in getting oil and gas, you are much rewarded for it by the world market. And it is less and less appealing to make other things by yourself. It is easier to buy them – even from a distant land – than to reassign resources to some less-than-optimal activity. The long-term effect can be already seen in Norway. The inflow of foreign workers, legal and illegal; relatively high price of labor – also in consumer services; visible drop in local production of food and FMCG – what is still available, is considered rather special, almost artisan kind of product. The vector of changes is unnerving, pointing in the direction certain Arab states go – buying everything, doing almost nothing. For the society like the Norwegian one, rooted in the tradition of work, of community, of personal involvement – it is clearly a kiss of death.

But surely, the most dangerous factor is the influence of globalisation (and neoliberal concepts) in social and political area. Decades of exposure to the US-led globalisation ideology seem to made Norwegian political class forget (maybe just a bit) about the old tradition of protestant ethics, community-oriented politics and social solidarity. The commodification of common-pool resources, that started from the oil and gas industry, gradually infused other areas. Most notable is the case of the fishing rights. which were nationalised and put into the market as the comodity, which left the most traditional Norwegian industry – fishery – defenceless against global fishing industry. Just recently, I heard another voices, supporting land consolidation and making huge, privatised, market oriented farms, to compete on the global food market.

The problem is that all that thinking denies centuries, if not millenia, of the Nordic and Norwegian social tradition. Besides, it also denies the fact that the most people want to be happy and healthy, not necessarily rich. And that is not the market approach. That is what we call “the common good”.

Now, perhaps it’s time to think about it?


Turning stories into reality.

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