The sleepy fishing town now boasts high-end fashion shops. The harbour is dotted with cranes and offshore oil platforms either in for maintenance or ready to float out to the North Sea drilling sites. It is evidence of good times. But it is also proof that Norway has avoided the so-called “Dutch disease.” Everywhere else in the world a boom in oil has led to a decline and sometimes devastation of other parts of the economy.
By contrast, Norway has held on to almost all of the revenue it earns in a giant and ever-growing savings account, known as the “oil fund.” It now holds almost $600 billion and is one of the largest sovereign wealth funds in the world.
Things you learn from how Norway handled its oil wealth.
1. Oil drilling and production was largely nationalized, keeping any one group of people from accruing massive, obscene oil wealth.
2. By controlling this wealth, the Norwegian government prevented the boom and bust oil cycle so common to other large petroleum fields.
3. Don’t slash tax revenue to the bone when things are good, having a surplus is not equivalent to stealing tax-payer money.
4. Norway is not Alaska, which pays out thousands of dollars a year to each house-hold, distributing its oil profits instead of investing in infrastructure and the social good.
5. You cannot be short-sighted when it comes to oil revenue. Planning is important.