Success of Norwegian Oil fund highlights Westminster failure

30
1577

By Martin Kelly

The strong performance of Norway’s Oil Fund has highlighted the scale of the missed opportunity resulting from the squandering of North Sea resource by successive UK Governments, the SNP has claimed.
 
Figures published today have revealed the extent of the success of the Norwegian fund, which now owns over one per cent of all global stock.

Norway’s Government Pension Fund Global began in 1996 with an initial investment of around $300 million, but reports in today’s Financial Times (Monday 20 August) place its value at a staggering $600 billion.

Originally expected to last around 30 years, experts now believe the fund could last a century or more.

Seizing on the new figures, the SNP claimed the mismanagement of North Sea resources had meant the UK was not as well placed to weather the economic storm as it could have been.  SNP MSP Maureen Watt said had a fund been in place then it could have been targeted at capital projects in order to ease the effects of the current recession. 

Commenting, Ms Watt who convenes the Infrastructure and Capital Investment Committee said:

“The speed and the scale with which Norway’s oil fund has grown shows just how big an opportunity successive UK Governments have let slip through their fingers.

“Had the oil and gas resources off our coasts been invested wisely, we would be far better placed to grow our way out of recession by funding capital investments.

“Investing in capital projects is perhaps the single most effective thing that could be done to get the economy growing again, which is why our calls for the Treasury to invest in shovel-ready projects have been backed so widely.

“While the Treasury may have denied itself the resource of an oil fund to fall back on, it is still imperative that George Osborne ends his stubborn obstruction and invests in infrastructure before the damage he is doing becomes irreparable.

“The Treasury may have failed in its responsibility to establish an oil fund, but it would be utter negligence if it now failed to invest in shovel-ready projects.”

The SNP has consistently argued that an oil fund is still possible.  Speaking in May this year, First Minister Alex Salmond pointed out that the UK Treasury was expecting tax receipts worth £13.4 billion from the sector this year.

With ninety per cent of the sector located in Scottish waters, the revenues that would come to an independent Scottish Exchequer would allow a wealth fund to be set up within a couple of years, said Mr Salmond.

Ms Watt added: “Of course the growth of the Norwegian oil fund over a relatively short space of time shows that it is not too late for Scotland to get started with its own oil fund, but to do that we will need the normal powers of an independent country.”

Unionists have argued that the levels of UK debt Scotland would have to shoulder if it became independent would mean such a fund would be unaffordable.

Earlier this year, the Centre for Public Policy for Regions (CPPR) published a report warning that diverting funds elsewhere would put at risk public services or add to Scotland’s national debt.

Speaking in March, CPPR member and former Head of Policy Research at the Scottish Labour Party, John McLaren said of SNP oil fund plans: “If this is a response to the concerns raised about the original proposal, it does not go far enough.  It does not explain when it would be set up, how the books would be balanced or where lost income [for services paid for by oil revenues] would be saved.

“There are many questions that need to be answered.  But in the end, why set up an oil fund when you can pay off national debt instead?”

In August 2010, Nobel Prize winning economist and former Chief Economist of the World Bank Josef Stiglitz stated that it was “imperative” that an oil fund be established after the UK had “squandered” North Sea oil resources.

Share on FacebookTweet about this on TwitterShare on Google+Email this to someone

30 COMMENTS

  1. Heard the news above delivered on the car radio by no less a person than the BBC Scotland correspondent Douglas Fraser.

    Had a quiet chuckle to myself as he proffered the details to the nation. Sounded like a dug chewing a wasp!

    “Oh” I said to myself “Who put that idea forward for Scotland about 2 years ago” “Oh yes . the ‘First Eck'”

    Of course it was pooh-poohed by the usual suspects as pie in the sky.

    It would be funny it was not so serious.

    • call me dave

      “It would be funny it was not so serious”

      I could cry!

      I watched the first phase – the short term folly when they allowed all the gas to be burned off to get some quick cash from the oil (around a third of the gas reserves was burned in the first few years).

      In the second phase it was Labour and the Tories taking turns each to prop up failing policies by using the oil & gas income.

      We still have time to gain some value from the remaining reserves – certainly enough to help kick off the re-newable energy boom and a re-industrialisation of Scotland.

      I hope we don’t squander our second chance.

    • call me dave

      “It would be funny it was not so serious”

      I could cry!

      I watched the first phase – the short term folly when they allowed all the gas to be burned off to get some quick cash from the oil (around a third of the gas reserves was burned in the first few years).

      In the second phase it was Labour and the Tories taking turns each to prop up failing policies by using the oil & gas income.

      We still have time to gain some value from the remaining reserves – certainly enough to help kick off the re-newable energy boom and a re-industrialisation of Scotland.

      I hope we don’t squander our second chance.

  2. Heard the news above delivered on the car radio by no less a person than the BBC Scotland correspondent Douglas Fraser.

    Had a quiet chuckle to myself as he proffered the details to the nation. Sounded like a dug chewing a wasp!

    “Oh” I said to myself “Who put that idea forward for Scotland about 2 years ago” “Oh yes . the ‘First Eck'”

    Of course it was pooh-poohed by the usual suspects as pie in the sky.

    It would be funny it was not so serious.

  3. [quote]Investing in capital projects is perhaps the single most effective thing that could be done to get the economy growing again, which is why our calls for the Treasury to invest in shovel-ready projects have been backed so widely.[/quote]

    It truly upsets me that politicians still do not understand – even after so many high profile examples – that Keynesian economics simply does not work.

    • Robbo

      That is an interesting assertion. Perhaps you might share those examples with us and explain why neoliberal solutions would resolve the present stagnation in the global economy

      • [quote name=”deepthroat”]Robbo

        That is an interesting assertion. Perhaps you might share those examples with us and explain why neoliberal solutions would resolve the present stagnation in the global economy[/quote]

        The great depression is the classic example.

        You have to let the market fail so that the misallocated resources from the boom years can be reallocated to more efficient use and you actually get a tangible productivity increase. Otherwise you are just propping up a failed system and you’re getting yourself into more debt by doing so.

        Of course no politician would ever have the courage to tell that to the electorate.

      • [quote name=”deepthroat”]Robbo

        That is an interesting assertion. Perhaps you might share those examples with us and explain why neoliberal solutions would resolve the present stagnation in the global economy[/quote]

        The great depression is the classic example.

        You have to let the market fail so that the misallocated resources from the boom years can be reallocated to more efficient use and you actually get a tangible productivity increase. Otherwise you are just propping up a failed system and you’re getting yourself into more debt by doing so.

        Of course no politician would ever have the courage to tell that to the electorate.

    • Robbo

      That is an interesting assertion. Perhaps you might share those examples with us and explain why neoliberal solutions would resolve the present stagnation in the global economy

  4. [quote]Investing in capital projects is perhaps the single most effective thing that could be done to get the economy growing again, which is why our calls for the Treasury to invest in shovel-ready projects have been backed so widely.[/quote]

    It truly upsets me that politicians still do not understand – even after so many high profile examples – that Keynesian economics simply does not work.

  5. Yep, small countrys what a bugger they are, always pretending they can responisebly govern themselves and make money.
    Well I’m telling you this Norway thing is just a fluke, it wont last you know. The next thing is they will be crying to go back into Swedish control because its all going to end in tears, it always does with these small countrys.

    This was a message from the “[b]Yes but, No but, Yes but, may be better together ‘as soon as we know who we are supposed to be with’ and who’s ??? in charge party”. [/b]

  6. Yep, small countrys what a bugger they are, always pretending they can responisebly govern themselves and make money.
    Well I’m telling you this Norway thing is just a fluke, it wont last you know. The next thing is they will be crying to go back into Swedish control because its all going to end in tears, it always does with these small countrys.

    This was a message from the “[b]Yes but, No but, Yes but, may be better together ‘as soon as we know who we are supposed to be with’ and who’s ??? in charge party”. [/b]

  7. Taxi time for McLaren I think.
    How does he think Norway never went into recession, don’t have a National debt that would choke a horse, and still have one of the highest standards of living in the world ?

    I lived and worked in Norway for 10 years and saw first hand how any country should be run. Managing it’s resources for all the people in the country, not just for a small corner who don’t appreciate it anyway.

  8. Taxi time for McLaren I think.
    How does he think Norway never went into recession, don’t have a National debt that would choke a horse, and still have one of the highest standards of living in the world ?

    I lived and worked in Norway for 10 years and saw first hand how any country should be run. Managing it’s resources for all the people in the country, not just for a small corner who don’t appreciate it anyway.

  9. Of course, it’s McLaren that proposes Oil cannot be relied upon because the price is so volatile !

    Ok, lets look at the history of oil prices over the last 30 years – represented by the arrow shooting skywards…. just desperate.

    It does make you wonder how a seemingly intelligent person can become so brainwashed by the political party he serves, or rather, helps fund his wages.

  10. Of course, it’s McLaren that proposes Oil cannot be relied upon because the price is so volatile !

    Ok, lets look at the history of oil prices over the last 30 years – represented by the arrow shooting skywards…. just desperate.

    It does make you wonder how a seemingly intelligent person can become so brainwashed by the political party he serves, or rather, helps fund his wages.

  11. We know the response:
    That is Norway, Scotland though is still too small, too weak, too stupid and did we not know the oil is running out?
    Ah!!!!!!!!!!

  12. We know the response:
    That is Norway, Scotland though is still too small, too weak, too stupid and did we not know the oil is running out?
    Ah!!!!!!!!!!

  13. Norway doesn’t just have the oil fund – they have a global energy giant in the shape of Statoil, in which the Norwegian government owns two thirds of the shares.

    Perhaps it would be better for the SNP to propose that they would use some of the oil revenues to start up such a company after independence, rather than attempt to develop an oil fund alone.

    We would have to start off small, but there is enough expertise here to make it work – not just in oil, but green energy too.
    Why shouldn’t we benefit directly from our own resources – keeping jobs and profits at home?

    We need to offer such meaningful benefits that independence could bring, compared to remaining part of the UK.

  14. Norway doesn’t just have the oil fund – they have a global energy giant in the shape of Statoil, in which the Norwegian government owns two thirds of the shares.

    Perhaps it would be better for the SNP to propose that they would use some of the oil revenues to start up such a company after independence, rather than attempt to develop an oil fund alone.

    We would have to start off small, but there is enough expertise here to make it work – not just in oil, but green energy too.
    Why shouldn’t we benefit directly from our own resources – keeping jobs and profits at home?

    We need to offer such meaningful benefits that independence could bring, compared to remaining part of the UK.

  15. Oil is sitting today at $115.27 a barrel having risen steadily from $97.00 a barrel about a month ago. I monitor the oil price on a daily basis due to the complete lack of reporting on TV.
    Throughout, the Pound has remained fairly steady at around the $1.57 mark.
    This means that the pump prices will rise higher in the coming days reflecting the current market rate for oil.
    Market sentiments suggest worries about the potential for conflict between Israel and Iran at the root of the price jitters. As of nothing if real hostilities break out.
    The US have armed their bunker busting bombs and Israel had opened gas mask distribution centers.
    Read the runes folks. Something is about to blow and the value of the oil in our waters is about to become volitile to the extent that we won’t be able to afford our own resource, well not at 60% tax anyway.
    Problem is, we can’t even go electric as that is now becoming unaffordable for all but the wealthy and the elite.
    Energy rich -power poor, what a terrible situation to be in.

  16. Oil is sitting today at $115.27 a barrel having risen steadily from $97.00 a barrel about a month ago. I monitor the oil price on a daily basis due to the complete lack of reporting on TV.
    Throughout, the Pound has remained fairly steady at around the $1.57 mark.
    This means that the pump prices will rise higher in the coming days reflecting the current market rate for oil.
    Market sentiments suggest worries about the potential for conflict between Israel and Iran at the root of the price jitters. As of nothing if real hostilities break out.
    The US have armed their bunker busting bombs and Israel had opened gas mask distribution centers.
    Read the runes folks. Something is about to blow and the value of the oil in our waters is about to become volitile to the extent that we won’t be able to afford our own resource, well not at 60% tax anyway.
    Problem is, we can’t even go electric as that is now becoming unaffordable for all but the wealthy and the elite.
    Energy rich -power poor, what a terrible situation to be in.

  17. Norway owns 1% of the world stock market and have wealth beyond our imagination. There are decades of oil reserves left in Scottish waters, not even half is out of the ground.
    Why are Scots too wee and stupid to do the same as the Norwegians?

    We have to get this message thru to the average voters who are only vaguely interested in the debate.

  18. Norway owns 1% of the world stock market and have wealth beyond our imagination. There are decades of oil reserves left in Scottish waters, not even half is out of the ground.
    Why are Scots too wee and stupid to do the same as the Norwegians?

    We have to get this message thru to the average voters who are only vaguely interested in the debate.

  19. Yes, good article.

    Oils funds are in place for Ireland, Shetland, England, Wales and the Isle of Man, yet there is no oil fund for Scotland, our portion of this currently funds England and the Isle of Man.
    This needs to be spelt out clearly and definitively by NewsnetScotland. This is not a “lack of investment” it is an intended snub or grab by Westminster, one of many to keep the balance in favour toward England, not that they have ever spent it wisely…..

    http://www.youtube.com/watch?v=sIOBG1AVUd8&feature=BFa&list=PL158479B17BB33CB2

  20. Yes, good article.

    Oils funds are in place for Ireland, Shetland, England, Wales and the Isle of Man, yet there is no oil fund for Scotland, our portion of this currently funds England and the Isle of Man.
    This needs to be spelt out clearly and definitively by NewsnetScotland. This is not a “lack of investment” it is an intended snub or grab by Westminster, one of many to keep the balance in favour toward England, not that they have ever spent it wisely…..

    http://www.youtube.com/watch?v=sIOBG1AVUd8&feature=BFa&list=PL158479B17BB33CB2

LEAVE A REPLY

Please enter your comment!
Please enter your name here