“Think of all the trouble [the big oil companies] would have if they couldn’t come to Canada and play God and get away with it.”
— Rolf Wiborg, former principal engineer at the Norwegian Petroleum Directorate
You know that awful feeling that hits when you realize that you’ve lost something really valuable? Like a wallet that’s no longer in a pocket? Or a bicycle that’s no longer locked to a bike rack? Or the initial bounce of an exceedingly small car part that flies out of your hand and disappears into the dust and grime of the garage floor?
I certainly remember those feelings. But now I’ve got them again, doing research for this column on Norway’s oil wealth.
How did their oil wealth fund get up to a trillion dollars, while ours sits at a mere $17 billion?
How did they manage to sock away an average of $40 billion per year, while we managed to sock away an average of only $425 million? (That’s a savings rate almost 95 times greater than ours.)
Is it because of their Viking heritage? Did that enable them to stand up to the pressures of the international oil companies?
Or are they just smarter than us? Or maybe a bit of both?
Actually, those are better explanations than anyone from Don Getty to Alison Redford ever came up with. And the writer Mitchell Anderson — who interviewed Rolf Wiberg to get the quote — fleshes it out quite well. In one of his essays on Norway’s sovereign wealth fund, he writes not only about the Viking habit of not taking BS from anyone, but also about the so-called “panic laws” enacted by the Norwegians in 1906.
The panic laws came about as a response to pressure from foreign speculators wanting to buy up their remote fjords and valleys. What were the remote fjords and valleys good for, you ask? Well, if you dammed them up, you could generate electricity at a handsome profit.
Now, the Norwegians weren’t against progress and rural electrification. But they were against foreigners telling them what to do.
Which brings me to Premier Jim Prentice.
And while I warmly applaud his recent initiative to eventually get 50 per cent of oil royalties into the much-neglected Heritage Savings and Trust Fund, I have to wonder why he didn’t see fit to tweak royalty rates or corporate taxes at the same time. Sure, we’ve all heard of the metaphor of the goose that lays the golden eggs (the goose being the foreign oil companies, and the eggs being the barrels of oil). But what if the goose is obese and can easily afford to go on a diet? Or what if there are many geese out there, and we can afford to pick and choose?
The royalty review in 2007 recommended higher rates, which were put into place. And this resulted in higher government revenues, but only for a couple of years, during which the oil companies protested loudly.
They threatened to leave town unless the rates got reduced. So the government of the day backed down.
Contrast that attitude to Norway’s, where a similar shoving match came to a remarkably different conclusion. This time, Anderson quotes Professor Einar Lie from the University of Oslo: “[The oil companies] were furious when they heard about the new taxation law.
And then they started a media campaign saying that they would leave Norway and that it was impossible to work in a socialist country like this that does not understand the rules of international capitalism.”
But at the end of the day, none of them left. At the end of the day, they remembered who really owned those eggs.
Admittedly, there is probably less wiggle room for royalties and taxation when oil is only $45 per barrel, but will Prentice remember the Norwegian lesson when oil goes back up past $100?
Evan Bedford is a local environmentalist. Direct comments, questions and suggestions to email@example.com. Visit the Energy and Ecology website at www.evanbedford.com.