Northern Arabs in Norway, not Alberta

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Stavanger is Norway's oil and gas capital, the staging area for its North Sea drilling properties.

STAVANGER, Norway -- Some Albertans may fancy themselves to be the blue-eyed Arabs of the north. If Norwegians were not so modest about their place in the world that boast would make the five million citizens of this overwhelmingly blue-eyed nation laugh.

A digital counter at the Norwegian Petroleum Museum tells the happy story: It turns over so quickly counting petro-kroners from the North Sea that all but the biggest numbers on the screen are a constant blur.

At a time when most of Norway's European cousins confront grave economic problems and Canadians are fearful of being sucked into the continent's financial quicksand, this Scandinavian nation remains an oasis of stability and calm.

The reason, plainly, is that it has more than 3.5-trillion kroner ($600 billion US) in the bank and counting.

Norway's Government Pension Fund is only 20 years old but is more than 30 times the size of Alberta's Heritage Investment Fund, which former premier Peter Lougheed started for "a rainy day" back in 1975. It is also bigger than Saudi Arabia's and a close second in size to the one run by one of the sheikdoms of the United Arab Emirates.

Stavanger is Norway's oil and gas capital.

The effects of the bounty that exists over the horizon can be seen everywhere in the harbour. Squat supply ships, many with helicopters, come and go at all hours, servicing massive oil rigs far out to sea. The city's picturesque waterfront is packed with fine restaurants and hotels with pristine parks and beautifully groomed residential areas spread out along majestic fiords.

Meanwhile, back in Oslo, mandarins oversee what is probably the world's most generous capitalist welfare system and financial experts quietly mull over where Norway's hurricane-force sovereign fund should place the additional billions in surplus cash that accumulate every year.

Norway posts such monster economic statistics that it is impossible to avoid superlatives. So rosy are its books and so high its standard of living that it has been rated No. 1 on the UN's Human Development Index for nine of the first 11 years of this century.

Canada was ranked sixth last year.

Norway owns more than one per cent of all the world's stocks. It has the world's highest GDP per capita in purchasing power parity -- at about $47,000 per person that is nearly $12,000 more per person than Canada. Its annual growth rate of 3.75 per cent makes it the superstar of the western world. So does its unemployment rate of only three per cent.

As well, as it wisely voted twice to stay out of the European Union and therefore has no obligation to spend any kroner to bail out countries such as Greece and Italy, Norway was poised last week, according to news reports, to spend billions of euros buying up prime real estate in Paris, with high-end German properties its next target. Its sovereign fund already spent more than half a billion dollars last year to buy a quarter-share in Queen Elizabeth's Crown Estates, concentrated around London's tony Regent Street.

Norway is a major global player in fishing (No. 2 to China) and merchant shipping. Nevertheless, oil and gas make up one-fifth of its economy. What is truly remarkable is not that it gets so much money from the bounty in the North Sea, but that there is a national consensus to leave the sovereign fund alone.

To do that requires that the citizenry continue to pay some of the highest taxes in the world.

Other oil-rich areas have not shown such resolve.

Saudi Arabia has constantly raided its cookie jar to buy off its restive population with free houses and ridiculously high-paying government jobs.

Alberta, particularly under former premier Ralph Klein, has often dipped into the Heritage Fund to help pay for health care and education and short-term bills. If it had been left alone, as Lougheed had intended, it would probably be five or six times larger today.

Britain has used almost all of its North Sea oil and gas revenues to pay current bills. This has allowed it to establish a lavish welfare state that it can't really afford and a military that, even after deep cuts, is still twice the size the British economy can properly pay for.

Not that everything in Norway is perfect. Oil and gas workers have been on strike for weeks over pay and pensions, which, combined with fears of a lockout by the energy companies, has pushed the price of oil back up to about $99 a barrel. The government stepped in Monday to order a last-minute settlement and keep the petrocash flowing.

The main long-term problem is the extremely high cost of living in Norway. Thanks to huge taxes, cars can cost three times what they do in Canada. Housing and transport are expensive. Food bills are astronomical. The taxi metre starts at $10. A local bus ticket costs more than $5. A simple meal for one without alcohol or dessert can easily run to $100 at a restaurant in Stavanger or Oslo. A combo meal at McDonald's runs about $15.

Nobody else can afford such prices, but Norwegians can. Without attracting much international attention, Norway has been on a roll for decades. It still may have as much as a century's worth of oil and gas under the North Sea.

"The question is whether the country can manage this wealth so that future generations can benefit," the Petroleum Museum says in one of its displays. All the evidence so far suggests the answer is yes.

Matthew Fisher is a Postmedia News columnist.

Republished from the Winnipeg Free Press print edition July 14, 2012 J11