5 ms·

All oil and gas exporters become dependant on that revenue. It's human nature to spend it all.

opo 7y ago
People can choose to do that, or they can choose to save and invest the money. Norway's oil fund is around 1 trillion dollars. >...The Government Pension Fund Global, also known as the Oil Fund, was established in 1990 to invest the surplus revenues of the Norwegian petroleum sector. It has over US$1 trillion in assets, including 1.4% of global stocks and shares, making it the world’s largest sovereign wealth fund. https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...
- sadfklsjlkjwt 7y ago
  An increasing proportion of Norwegian spending is already covered by the revenues from the Oil Fund. This crisis has seen a near perfect storm of massive increase in welfare spending, massive fall in the value or the Oil Fund's assets and massive decrease in the price of oil (and hence the input for the Oil Fund). It will be very interesting to see what happens with the fund in the next 10-20 years. EDIT: To be clear I am glad the fund exists. It has been and is a much better way of using the natural resource bonus. However, I strongly suspect that Norway will use the entire fund cushioning the transition away from being an oil producer.
  - jacobush 7y ago
    Not a bad use.
    - teknopaul 7y ago
      Countries under sanctions, obviously, cannot choose what to spend their money on. If you impose sanctions you are essentially government planning another country. I agree with the article's principal point that this is very likey to go horribly wrong somewhere soon. Prevention is better than cure. Even from a purely selfish viewpoint.
  - zrail 7y ago
    > I strongly suspect that Norway will use the entire fund cushioning the transition away from being an oil producer My very cursory understanding of the Fund is that cushioning that known inevitable circumstance was the entire point in the first place.
ashtonkem 7y ago
Norway stands as an obvious counter example; they’ve invested a huge amount of their oil money into a sovereign fund, and have a fairly robust economy too.
- selectodude 7y ago
  Sure, but Norway is really the exception to the rule. Dutch disease is pretty much universal.
  - ashtonkem 7y ago
    It’s not though. America’s an oil producing nation, as is the UK and Norway. Dutch disease is common, but hardly universal. There are known mitigation techniques that can be applied, including a sovereign wealth fund.
    - dredmorbius 7y ago
      As I just commented elsewhere in thread,[1], the US is an exception. But there are multiple factors: 1. The US ceased being a net oil exporter, and began importing oil, in 1950, over 70 years ago.[2] 2. When the US was an oil exporter, both global oil use and industrial capacity were far lower than today, and cargo shipping costs much higher. The US was among the early industrialised nations (with the UK, Germany, France, and Italy, generally), all (save Italy) with major coal reserves. For the US to meet industrial demand it largely needed to self-provision. 3. WWII. 4. Even within the US, oil-producing regions and industrial regions tended to be quite distinct. Norway became an oil exporter quite recently (major production largely coming online in the 1990s), and its economic and industrial policy has been excellent. The UK similarly, though it's arguably been hindered by a legacy industrial system as well as its role as a major finance centre (another form of Dutch disease). ________________________________ Notes: 1. https://news.ycombinator.com/item?id=23060290 https://news.ycombinator.com/item?id=23060290 2. With fracking, over the past 5 years or so, the US has exported ... some petroleum-based products, mostly lease condensate and natural gas liquids (NGLs), very light fractions of petroleum. This is unsuitable for motor fuel (its octane rating is too low, and much is sold to Venezuela and Canada, effectively to make their tar-like oil more soluble. This is likely a tem-orary circumstance.
zeckalpha 7y ago
Or you can invest in energy alternatives like nuclear, like Iran has attempted.

opo 7y ago

People can choose to do that, or they can choose to save and invest the money. Norway's oil fund is around 1 trillion dollars. >...The Government Pension Fund Global, also known as the Oil Fund, was established in 1990 to invest the surplus revenues of the Norwegian petroleum sector. It has over US$1 trillion in assets, including 1.4% of global stocks and shares, making it the world’s largest sovereign wealth fund. https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...

sadfklsjlkjwt 7y ago
An increasing proportion of Norwegian spending is already covered by the revenues from the Oil Fund. This crisis has seen a near perfect storm of massive increase in welfare spending, massive fall in the value or the Oil Fund's assets and massive decrease in the price of oil (and hence the input for the Oil Fund). It will be very interesting to see what happens with the fund in the next 10-20 years. EDIT: To be clear I am glad the fund exists. It has been and is a much better way of using the natural resource bonus. However, I strongly suspect that Norway will use the entire fund cushioning the transition away from being an oil producer.
- jacobush 7y ago
  Not a bad use.
  - teknopaul 7y ago
    Countries under sanctions, obviously, cannot choose what to spend their money on. If you impose sanctions you are essentially government planning another country. I agree with the article's principal point that this is very likey to go horribly wrong somewhere soon. Prevention is better than cure. Even from a purely selfish viewpoint.
- zrail 7y ago
  > I strongly suspect that Norway will use the entire fund cushioning the transition away from being an oil producer My very cursory understanding of the Fund is that cushioning that known inevitable circumstance was the entire point in the first place.

ashtonkem 7y ago

Norway stands as an obvious counter example; they’ve invested a huge amount of their oil money into a sovereign fund, and have a fairly robust economy too.

selectodude 7y ago
Sure, but Norway is really the exception to the rule. Dutch disease is pretty much universal.
- ashtonkem 7y ago
  It’s not though. America’s an oil producing nation, as is the UK and Norway. Dutch disease is common, but hardly universal. There are known mitigation techniques that can be applied, including a sovereign wealth fund.
  - dredmorbius 7y ago
    As I just commented elsewhere in thread,[1], the US is an exception. But there are multiple factors: 1. The US ceased being a net oil exporter, and began importing oil, in 1950, over 70 years ago.[2] 2. When the US was an oil exporter, both global oil use and industrial capacity were far lower than today, and cargo shipping costs much higher. The US was among the early industrialised nations (with the UK, Germany, France, and Italy, generally), all (save Italy) with major coal reserves. For the US to meet industrial demand it largely needed to self-provision. 3. WWII. 4. Even within the US, oil-producing regions and industrial regions tended to be quite distinct. Norway became an oil exporter quite recently (major production largely coming online in the 1990s), and its economic and industrial policy has been excellent. The UK similarly, though it's arguably been hindered by a legacy industrial system as well as its role as a major finance centre (another form of Dutch disease). ________________________________ Notes: 1. https://news.ycombinator.com/item?id=23060290 https://news.ycombinator.com/item?id=23060290 2. With fracking, over the past 5 years or so, the US has exported ... some petroleum-based products, mostly lease condensate and natural gas liquids (NGLs), very light fractions of petroleum. This is unsuitable for motor fuel (its octane rating is too low, and much is sold to Venezuela and Canada, effectively to make their tar-like oil more soluble. This is likely a tem-orary circumstance.

zeckalpha 7y ago

Or you can invest in energy alternatives like nuclear, like Iran has attempted.