Why Norway is Becoming the World's Richest Country
Summary
TLDRNorway is a geographic anomaly - despite having little arable land, harsh terrain, and a sparse population, it has been wealthy for centuries due to its expansive coastline and lush forests. After discovering offshore oil and gas in the late 1960s, Norway employed forward-thinking policies like state ownership, foreign partnerships, and its massive sovereign wealth fund to avoid typical 'petrostate' problems. Now, with some of the world's largest oil, gas, and emerging mineral reserves combined with immense renewable energy potential, Norway is positioned to remain a European and global energy superpower while diversifying into a broader economic giant.
Takeaways
- 😲 Norway has a massive coastline and rugged terrain, making travel by land difficult but travel by sea easy
- 🤑 Norway was already quite wealthy before discovering oil due to industries like lumber, hydroelectric power and shipping
- 💡 Norway took a pragmatic, long-term approach to foreign investment in natural resources like hydropower and later oil/gas
- 🌳 Norway's oil wealth did not lead to authoritarianism or inequality due to existing decentralized wealth/power and cooperative ownership
- 📈 Norway set up a sovereign wealth fund in 1990 to invest oil profits abroad, shielding itself from overreliance and price drops
- ⚡️ Norway uses ample renewable energy to meet domestic needs, freeing up more oil and gas to export and further diversify its economy
- 🚗 Norway incentivizes electric vehicle adoption to reduce oil consumption and enable higher exports
- 😎 Norway is displacing Russian market share as the EU's top supplier of oil, gas and potentially future renewables
- 🔋 Newly discovered mineral deposits may allow Norway to supply vital metals and rare earths to Europe as well
- 💰 Norway's oil fund owns 1.5% of global stocks - its future generations are set up for prosperity
Q & A
How did Norway's geography contribute to its early prosperity?
-Norway's rugged geography made land transportation difficult but gave it an extensive coastline. This allowed maritime trade to flourish early on, enabling Norway to become a major lumber exporter and develop a strong merchant fleet and shipbuilding industry.
When did Norway discover offshore oil and gas?
-In late 1969, the Phillips petroleum company discovered the Ekofisk oil field, one of the largest offshore oil fields ever found. This kicked off Norway's oil era in the 1970s.
How did Norway avoid the "resource curse" with its oil wealth?
-Norway was already a stable democracy with decentralized wealth and power. It set up state-owned Equinor to give it control over its resources. In 1990 it established a sovereign wealth fund to invest oil profits abroad, avoiding economic over-reliance on oil.
Why is Norway such a major oil and gas exporter?
-Its small population means low domestic energy needs. Its abundant renewable hydro and growing wind power meets most of its electricity needs, leaving more oil and gas to export. And its proximity to Europe provides ready export markets.
What is Norway's electric vehicle policy?
-Norway offers generous tax incentives for its citizens to adopt electric vehicles. As a result, almost a third of vehicles in Norway are now EVs, reducing domestic oil demand further so more can be exported.
How did the Ukraine invasion benefit Norway economically?
-As Europe imported less Russian energy after the invasion, Norway exported more oil and gas to replace it. Norway's 2022 energy export revenue doubled year-over-year to a record $131 billion.
How did Norway come to dominate phosphate reserves?
-In 2023 a huge, world-leading phosphate deposit was discovered in Norway, instantly doubling global reserves. This undermines Morocco's previous dominance of phosphate vital for agriculture and batteries.
How could Norway undermine China's rare earth dominance?
-The Norwegian phosphate discovery likely also contains large titanium and vanadium deposits. Europe relies heavily on China for these metals vital to high-tech manufacturing.
How does Norway use its oil wealth responsibly?
-Norway caps withdrawals from its $1.2 trillion sovereign wealth fund at 3% yearly. This lets it keep growing to diversity away from oil dependency, while providing for 20% of Norway's annual budget.
Why does Norway have the potential to remain an energy superpower?
-Climate change may increase Scandinavian precipitation and wind levels. Norway could not only export more renewable hydro and wind power, but replace even more Russian energy imports to Europe.
Outlines
👷♂️ Norway has a small population but large area with little arable land
Norway has a small population of 5.2 million compared to city states like Singapore. But it has a very large land area, mostly mountains and fjords, with only 2.2% arable land. This limits agricultural potential.
🚢 Norway's geography encouraged maritime culture and timber exports
Norway's difficult terrain made land travel hard but sea travel easy via the fjords. This enabled maritime trade and exports of lumber from the interior forests. Shipbuilding became a cooperative effort.
💡 Hydropower unlocked Norway's potential in early 1900s
Harnessing rivers for hydropower electrified Norway by 1920. This enabled energy-intensive aluminum production and industry. Hydropower is now 95% of electricity.
🛢️ Oil discovered in late 1960s made Norway even richer
The Ekofisk oil field was discovered in 1969. Further discoveries followed. Rules ensured Norwegian control, with Statoil (now Equinor) always having over 50% stake.
😎 Norway exports oil and gas but keeps renewable energy
Domestic hydropower and growing wind power are kept for Norway's needs. This enables exporting most of the oil and gas, making Norway a major exporter despite modest reserves.
🏦 Oil wealth wisely invested in sovereign fund since 1990
The oil fund was established to invest surplus oil revenue. Strict rules prevent overspending. It has grown to be the world's largest sovereign fund at $1.2 trillion.
🔋 Norway displaces Russia as top EU energy supplier
With Russia's invasion of Ukraine, EU banned Russian energy imports. Norway has filled much of the gap, with its oil and gas exports to EU surging.
🤑 Financial bonanza enables further strategic investment
Norway's oil and gas revenue hit record levels in 2023. Tens of billions are being invested in new production, pipelines to EU, and the wealth fund.
💰 Norway set to export minerals and renewable energy also
In addition to oil and gas dominance, huge phosphate deposits discovered in 2023 position Norway to supply vital minerals. Excess renewable power may also be exported.
Mindmap
Keywords
💡Norway
💡geography
💡hydropower
💡oil and gas
💡communal ownership
💡exports
💡Russia
💡renewables
💡rare earths
💡wealth fund
Highlights
Norway has a massive coastline, second longest in the world, enabling maritime trade despite difficult overland travel
Lumber industry thrived in medieval Norway due to accessible forests and fjords for transport
Early shipbuilding was cooperative, influencing Norway's economy for centuries
Hydropower unlocked in early 1900s, rapidly industrializing Norway
Oil discovered in 1969, transforming Norway into a major energy exporter
Norway avoids "resource curse" via communal ownership, existing institutions
Sovereign wealth fund created in 1990 to diversify away from oil dependency
Fund now largest in world, worth $275,000 per Norwegian
Domestic renewables allow Norway to export more oil and gas
War in Ukraine made Norway top EU energy supplier, huge windfall
Further pipelines and exploration with windfalls
Future renewable exports possible as climate change increases precipitation
Massive rare earth discovery doubles global phosphates, with more possible
Set to supply EU with raw materials, undermining Russian and Chinese leverage
Infinite money glitch from oil wealth diversification and strategic industry control
Transcripts
in terms of people Norway is a pretty
small country home to only about 52
million individuals to put that into
perspective Norway has fewer people than
many of the world city states do such as
Singapore's 6 million people or Hong
Kong's nearly 7 1.5 million people but
while small in people Norway is very
large in land the country has about
385,000 Square km worth of overall land
roughly 140 times larger in geographic
area than Hong Kong and roughly 464
times larger than Singapore despite
having a fewer number of people than in
either put another way Norway's
Geographic size is also roughly
equivalent to Japan's and both countries
have a similar amount of mountains that
cover them and yet Japan has 22 times
more people living within its similar
mountainous area than Norway naturally
this makes Norway one of the most
sparsely populated and overall empty
countries in the world with the lowest
density of people that can be found
anywhere in Mainland Continental Europe
with the northern half of the country
stretching beyond the Arctic Circle in
the Far North with a very thin layer of
top soil above Bedrock the land of of
Norway is mostly harsh mountainous
rugged and very cold with a short
growing season an environment that
doesn't lend itself very well to
sustaining large numbers of people only
2.2% of Norway's land is even considered
aable and suitable for agriculture one
of the lowest percentages in the world
and roughly equivalent to Yemen's
percentage a mountainous country in the
Arabian Desert without even any rivers
that's widely regarded as a failed State
this ultimately means that despite
having 385,000 km of overall land only
about
7,124 square kmers of Norway's land is
suitable for agriculture a poultry
amount that is similar to the amount of
arable land found in El Salvador a
country that is 16 times smaller than
Norway in overall land but which has a
similar population of about 6.3 million
people because the two countries have a
similar amount of aable land that they
can actually use to sustain their
populations with and then to make
matters even worse for Norway their
small amounts of varable land are
scattered all throughout the south of
the country in small valleys in between
all of their massive mountains which has
always made the creation of large
integrated and efficient farms in the
country impossible with its vast and
wide open expanses of varable land all
throughout the country the average Farm
size in the United States is more than
eight times greater than that in Norway
as a result and so American Farms are
more integrated more efficient and more
productive as a result and can simply
feed many times more people because of
these inherent disadvantages when it
comes to agricultural potential there
have been expectations and assumptions
made by people all throughout Norway's
history that the country should
naturally be poor or at least that
Norway was historically a poor country
until the sudden discovery of oil
changed everything in the late 1960s and
paved the way for Norway's currently
well-known Prosperity but the
interesting truth is that oil didn't
actually make Norway Rich it just made
Norway even richer than it already was
beforehand contrary to popular belief
Norway has been a relatively wealthy
country for most of its entire history
and it almost counterintuitively has to
do exactly with the same geography that
makes the country so terrible for
agricultural production there are other
Geographic factors that can determine
the fate of Nations Beyond agricultural
potential and one of the biggest others
is how easy it is to travel around the
country's territory and conduct trade
transportation across Norway by land
however has always been very difficult
for thousands of years before modern
highways and tunnels traveling along the
Norwegian West Coast on foot or horse
was basically impossible because of the
omnipresent steep mountains and deep FS
that carved all across the landscape but
this seemingly Geographic first actually
turned into one of Norway's greatest
Geographic blessings and disguise
because of all the jagged fjords located
all throughout the Norwegian Coast
Norway is generally regarded as having
by far the longest coastline anywhere in
Europe with a coastline that's more than
6 and 1 half times longer than the
United Kingdom according to the CIA
World fact book in fact Norway's
coastline is considered to be so
enormous because of all these fjords
that it's ranked as having the second
longest coastline of all the countries
in the entire world remaining only
behind the number one spot spot of
Canada this is always meant that as
Norway coalesced into a modern nation
state its small population was always
scattered in small clusters all
throughout the mountains and the fs
separated from one another across land
not too unlike other mountainous
societies like Afghanistan or Persia but
unlike those societies deep within the
interior of Eurasia the small scattered
population clusters across Norway all
had easy and immediate access to the
global ocean because of all of the fs
that cut deep into Norway's interior
this geography encouraged a maritime
culture to developed within Norway from
very early on and the fs granted the
Norwegians the ability to rapidly travel
between each other's settlements by sea
moreover the fs enabled easy access for
Traders to penetrate deep into the
country's interior and get close to one
of Norway's greatest natural assets its
huge forests and lumber resources Norway
has never had the largest forest in
Europe it's beaten out by many other
countries with larger ones like Russia
Finland Sweden and even France but for
centuries all throughout the age of sale
before the development of railroads
unlocked Russia's Lumber potential
Norway's Lumber industry was the biggest
in Europe because of how much more
relatively easier it was to access their
forest in the interior through the fs
and exported to markets Norway's Lumber
could be felled within the interior then
cheaply and efficiently dumped into
rivers and floated Downstream toward the
settlements and Sawmills along the
fjords where Sawmills powered by those
same downhill rivers and their
waterfalls would refine the lumber and
the lumber could then be cheaply
exported out through the fs and onto the
global market and so until the later 19
18th century when railroads fully unlock
the lumber potential of European
countries with larger forests like
Russia Finland and Sweden these relative
Geographic advantages made Norway the
lumber Powerhouse of Europe for
centuries and the country's Maritime
culture enabled it to build out a
worldclass merchant Fleet by the time
that the 20th century rolled around
Norway already had the fourth largest
Merchant Marine Fleet in the entire
world the nature of Norway's well
connected but spread out in lowdensity
population also encouraged two things
one the communities were all connected
to each other by the fs and by the Sea
which led to a common identity emerging
between all of them despite their
mountainous geography and two Norway's
small population clusters learned early
on to cooperate together on ship
building and construction for all of
their common benefit entire Norwegian
towns would cooperate together on the
construction of ships that were vital
for all of their survival and shares in
the ship's ownership would be divided
amongst nearly everyone in the town who
participated from The Lumberjacks to the
Craftsmen over time this resulted in a
much more spread out in decentralized
distribution of wealth and ownership in
Norway in addition to the spread out and
decentralized population and so a large
centralized and Powerful class of
capitalists never really developed in
the country the same way that they did
elsewhere in places like France and
Britain with their populations and
economies both largely concentrated
around their political capitals Norway's
geography conversely forced its people
to trust each other and to cooperate on
building the ships that were vital to
their survival and so early ship
building in Norway was largely
Cooperative in nature and then that
influenced the country's economy for
centuries afterwards through to the
present day as Norwegian agriculture
forestry Maritime insurance and fishing
all became dominated by cooperatives
while the Norwegian banking sector
throughout the 19th and 20th centuries
became effectively dominated by
Cooperative Credit Unions as well across
the 19th century then when Norway was
widely believed to be a fairly poor
region Norway was actually already doing
very well for itself in relative terms
by the 1850s Norway's GDP per capita was
already higher than basically the
entirety of Eastern Europe exceeding
that of Bulgaria Romania Poland Hungary
and Czechoslovakia and by the 1880s
Norway's GDP per capita had eclipsed
virtually all of southern Europe too
including Portugal Spain and Greece
while by the turn of the 20th century in
1900 it had even surpassed that of Italy
and then by 1938 on the eve of the
second world war decades before the
discovery of oil in the country Norway's
GDP per capita had already exceeded
those of Germany France and the United
Kingdom and by some estimates it was
already the wealthiest country on
average in Europe a huge part of the
reason why Norway's economy accelerated
so rapidly between 1900 and 1938 was the
Advent of modern advanced water turbines
and hydroelectric dams that completely
revolutionize Norway's Geographic
potential even further Norway is a land
that is almost completely covered by
rivers that begin high up in the
mountains and then Thunder down their
steep elevations toward the fs and the
coast in the west these rivers are fed
by predominantly Westerly winds that
bring them abundant levels of
precipitation and their steep drops and
waterfalls provide a massive amount of
kinetic energy just sitting there that
can be captured by turbines to generate
electricity Norway therefore has one of
the highest hydroelectric power
potentials of any country in the world
and beginning in 1905 they started
allowing outside foreign companies with
higher levels of expertise come in and
start building modern hydroelectric dams
to unlock their potential dozens and
then hundreds of Hydro power stations
were built all across the country to the
point where today there are 84 large
hydrop power stations with capacities
greater than 10 megaw and 838 small
hydrop power stations with capacities
between 1 and 10 megaw with hundreds of
even smaller stations on top of that all
combined these hydr power stations today
are powerful enough to generate an
overwhelming 95% of all of Norway's
total electricity demand while Norway is
the seventh largest producer of
hydropower anywhere in the world as of
2024 with a total generation rate that
is more than half of the United States
but all for only 167th of the American
population the harnessing of Norway's
hydromite in the early 20th century
provided the country with its first
major economic boom as it enabled the
country to rapidly industrialize and
Electrify Itself by 1920 Norway was
consuming more electricity per capita
than any other country in the world and
more than 2third of the population
already had access to electricity which
was double the rate in the United States
at the time this huge amount of energy
for such a small population then enabled
the Norwegians to develop extremely
energy-intensive factories that
eventually leing in specializing in
refined aluminum production under the
norsk hydro corporation which is today
one of the largest aluminum companies in
the world norsk Hydro continues to
Source the vast majority of the energy
they use to produce refined aluminum
from Norway's hydrop power and the
company is 34% publicly owned by the
Norwegian state it has enabled Norway to
become by far the largest producer of
aluminum in Europe and the eighth
largest producer in the world today
which further makes the country the
largest provider of aluminum to the
European Union but just hydr power
continued unlocking Norway's potential
in the early 20th century the industry
came to become dominated by the large
foreign companies that came to Norway to
invest and build all of the dams out and
so Norway sought to gradually rest
control over them to secure its own
National control over its own resources
Norway's small and spread out population
lacked large amounts of capital and
Technical expertise however they needed
the large foreign investors to help them
build out their hydroelectric and
Factory potential and so a straight up
quick nationalization of the foreign
investor assets would have sent all of
that foreign investment and expertise
they needed fleeing in the future to
avoid that outcome but to still secure
their own control over their own
resources Norway decided on taking a
pragmatic and long approach to the hydro
industry that would directly influence
their approach to the oil and gas
industry decades later Norway
established rules that foreign companies
who came to invest in Norwegian Hydra
would have to follow that included
Clauses that hydroelectric power
stations and mines they built and funded
would have to be turned over to the
Norwegian government without
compensation after a period of 60 to 80
years of operation this way the larger
foreign companies would continue to
invest in the country since they would
see a long enough return on their
investment but the Norwegian State knew
that in the long run they would be the
ones to secure the keys to their crown
jewels and as a result more than 90% of
Norway's hydr capacity is publicly owned
by the state today and this is all why
Norway was already a wealthy heavily
industrialized Democratic and lowc
Corruption state by the time that
interest in the country's potential
offshore oil and gas Fields came around
in the late 1950s but at the time back
then there were very few people who
actually believed that there was any oil
or gas to be found around the country
particularly on the shallow and
submerged part of the European
continental shelf stretching beneath the
North Sea a large part of which had
geologically speaking only been recently
submerged a few thousand years ago at
the end of the previous Ice Age in a
letter written by the Geological Survey
of Norway in 1958 that has since aged
fairly poorly They concluded that the
possibility of any oil or gas resources
being discovered on the Norwegian part
of this continental shelf should be
discounted entirely but then very
suddenly in 1959 just the year after
that letter was written a very major
natural gas Discovery was made nearby
that sparked significant further
interest the grenan gas field in the
northern Netherlands it turned out that
the grin field to date is the 11th
largest single natural gas field ever
discovered in the world and the largest
one ever discovered within the European
continent it became Central to the early
emergence of the Netherlands as a major
gas producing country and it became a
Cornerstone of the domestic European gas
market and so naturally its Discovery
back in 1959 sparked renewed interest in
curiosity that just perhaps there were
further gas and potentially even oil
Discovery still to be made further
Beyond beneath the as yet unexplored
North Sea as well 3 years later in 1962
the American petroleum major Phillips
became the first to submit an
application to the Norwegian government
to begin exploring for oil and gas
resources within their section of the
North Sea the only problem was at the
time nobody really knew where Norway
section of the North Sea actually was
because the maritime boundaries within
the North Sea hadn't been firmly or
legally settled yet between all of the
Nations that surrounded it but luckily
for Norway in 1965 eager to get
exploring and drilling themselves the
government of the UK hastily agreed to
Simply divide the continental shelf
beneath the North Sea based on the
principle of the median line distance
the geographic Line running down the
center of the North Sea between the UK's
land territory and Norway's land
territory decades later this Hasty
calculation would go on to massively
benefit the Norwegians because it took
into account all of the thousands of
Norway's Islands just off of their
western coast in determining where the
median line ran including the island of
UTA 16 km west from the mainland
Norwegian Coast which shifted the median
line boundary westwards just ever so
much by a few extra kilometers that when
the massive stratch yard oil field was
discovered later in the 197 s right
along the median line only 15% of it
would exist within the previously agreed
upon UK Maritime Zone while 85% of it
would be within the Norwegian Zone
giving literally billions of dollars in
extra oil Revenue to the Norwegians over
the British as a result almost
immediately after agreeing with the
British on the median line principle in
1965 the Norwegian government began
granting exploration licenses to larger
and more experienced foreign companies
to search through their Waters that
included Phillips and the first oil was
struck only a couple years later in 1967
at a field they called Boulder but it
wasn't considered economically viable at
the time it wouldn't be until the 1990s
three decades later that balder would
finally begin operation and then finally
just before Christmas Day in 1969
Phillips delivered the Norwegian
government and people perhaps the
greatest Christmas present in their
nation's entire Millennia long history
the news that they had discovered the
echo Fisk field which turned out to be
one of the largest offshore oil fields
that has ever been discovered before or
since anywhere in the world production
out of echo Fisk began only a couple
years later in 1971 and then a series of
further major oil and gas discoveries
were made all across the Norwegian
continental shelf over the years that
followed at Fields like Stratford osberg
gfax and troll the latter of which
generated a media sensation in 1996 when
the Norwegians transported the troll a
offshore oil platform to the field from
the Norwegian Mainland to date this
operation remains both the heaviest and
the tallest structure that has ever been
moved by human beings from one part of
the Earth's surface to another it was
also during this time that the
Norwegians quickly began applying the
previous lessons they had learned with
the country's Hydro industry to the
rapidly emerging oil and gas industry as
well the country founded a state-owned
oil and gas company that they initially
called stat oil almost immediately after
the first production of oil began and
just like the pragmatic and long-term
approach that the Norwegians took with
the country's Hydro industry in the
early 20th century they began
establishing rules that the larger and
more experienced foreign oil and gas
companies would have to follow in order
to invest in Norway's resources that
would ensure Norway's eventual control
over them the Norwegian state-owned stat
oil was to always have more than a 50%
ownership stake in every production
license that the government granted
which was designed to provide the larger
and more experienced foreign oil and gas
companies an incentive to still come and
invest in the country while also
providing stat oil with valuable Real
World Experience through learning from
the joint ventures and Norway's previous
high levels of expertise in the ship
ship building industry proved invaluable
to Norway's quick Mastery of offshore
and subsea oil and gas infrastructure
projects too one of the leading
underwater oil and gas infrastructure
companies in the world today is
currently sub C7 with billions of
dollars in annual revenue and they were
founded as a joint venture in 2002 by an
American company and a Norwegian ship
building company known as
name was changed to what it's currently
known by Econo and today thanks to
Norway's foresight and guiding the
company and helping it gain foreign
expertise over the decades ecor is
itself a global energy major and is
ranked as the 10th largest oil and gas
company in the world with a current
market cap of roughly $85 billion which
puts it on a similar footing to the
current market cap of BP at about 98.3
billion equinor now produces
approximately 70% of all the oil and gas
on the Norwegian continental shelf today
and it remains 67% majority owned by the
Norwegian government with the remaining
33% of its shares being publicly traded
on global stock exchanges like the New
York Stock Exchange on the NASDAQ and as
it turned out there actually was a lot
of oil and gas on the Norwegian
continental shelf so much so the Norway
now has the largest reserves of oil in
Europe outside of Russia and is ranked
20th in the world with similar volumes
as former OPEC countries Angola and
Ecuador and with more than three times
as many reserves as the next place in
Europe just across the North Sea the UK
and in terms of natural gas Norway again
is ranked as having the largest reserves
in Europe outside of Russia and the 21st
largest in the world with volumes that
are similar to The Lights of Kuwait and
aeran and with its extremely close
proximity to the European Union's Market
Norway had a ready too export Market all
lined up for itself as well with hardly
any oil and gas resources of their own
beyond the Gren gen gas field in the
Netherlands the EU has practically
always had to import the vast majority
of the oil and gas they consume from
abroad oil was a far easier problem for
the EU to solve though because oil can
effectively be imported from anywhere
else in the world the block was less
handicapped by geography here because in
its crude form oil is a liquid that can
be easily loaded up into barrels or
containers and shipped across the oceans
on container ships from origin to
destination meaning that the EU could
easily import oil from as far away as
the Americas in Nigeria with little
worries but natural gas was a completely
different problem for the Europeans to
solve gas is far more difficult and
expensive to export and move around the
world than oil because well it's a gas
while it's in its gas estate it takes up
a huge amount of volume and it's
completely economically impractical to
load up onto container vessels and ship
somewhere else thus before the rise of
liquefied natural gas production gas
markets were highly geographically
Regional in nature for Europe this meant
building out a series of pipelines to
transport natural gas from relatively
nearby sources to Consumers
the largest of which during the 20th and
early 21st centuries were constructed
from the relatively nearby gas sources
in the Netherlands Algeria the Soviet
and later Russian Siberian fields from
aeran after the collapse of the Soviet
Union and of course from Norway and the
Norwegian continental shelf this
historically made the EU mostly
dependent upon natural gas imports from
three of its closest and largest
neighbors Russia Norway and Algeria by
2021 Norway had constructed a total of
11 undersea gas pipelines connecting
their gas resources directly to European
consumers and then in 2010 Norwegian gas
production exceeded the country's oil
production for the very first time as
the demand in the EU and the UK
continued growing for more and by the
2010s Norway had already emerged as the
second largest exporter of natural gas
to the EU only behind the Russians by
2021 the year immediately before Russia
launched its full-scale Invasion into
Ukraine Russia was supplying about 40%
of the eu's total gas Imports while
Norway was supplying about another other
25% of them while Russia was further
supplying the EU with about 25% of their
oil imports up against Norway's share of
99.4% of their oil imports and by this
point with billions of dollars a year
gushing into the Norwegian economy
Norway had already effectively become a
Petro State the only one in Europe other
than Russia in 2021 oil and gas made up
roughly 21% of the entire Norwegian GDP
and made up a whopping 51% of all of
Norway's exports by value but Norway
never actually evolved into the usual
petate stereotypes of corruption and
authoritarianism for several notable
reasons that set it notably apart from
the others well there is no universally
agreed upon definition of what actually
constitutes a Petro State the most
General definitions revolve around
countries whose economies are very
heavily dependent upon the extractions
and exporting of oil and gas to the
point where without those Industries
their economies could face collapse 25
countries around the world spanning
South America Africa the middle east
Europe and Asia usually come to mind as
the world's most classic examples of
Petro States and out of all 25 of them
every single one are considered by The
Economist democracy index to be either
authoritarian regimes or hybrid regimes
except for only two of them Indonesia
and Norway but Norway stands out above
all of the rest ahead of even Indonesia
because the same index from The
Economist literally ranks Norway as the
single most democratic free and
egalitarian society on the face of the
Earth which puts its status as a Petra
State into an extremely stark contrast
with the likes of Saudi Arabia Iran
Russia and Venezuela which are all among
the most heavily authoritarian and
corrupt states in the world and a big
part of the reason why an abundance of
oil and gas resources didn't turn Norway
into a heavily authoritarian and corrupt
state like most of the other Petra
States is because of the country's
geography history and forward-looking
policies that their government enacted
from early on when Norway discovered oil
the country already had a long culture
of communal ownership of Natural
Resources going back centuries to the
lumber and hydro Industries the country
was was already wealthy industrialized
highly developed and had a stable
functioning democracy where wealth and
power were each already highly
decentralized Democratic institutions
and communal ownership of resources were
already strongly ingrained within the
fabric of Norwegian society as a result
which is an incredibly stark contrast to
just about every single other country
that discovered enormous oil and gas
wealth Saudi Arabia discovered its oil
wealth when it was ruled by a warlord
who had established an absolute monarchy
and had already centralized Power full
around himself and so the oil wealth
only further cemented the monarchy's
power oil was similarly discovered in
Iran while the country was ruled by an
autocratic monarchy and the keys to the
oil wealth were inherited by the still
autocratic Islamic revolution after 1979
oil was discovered within Russia during
the zaris period and the keys to the oil
wealth were inherited by the still
autocratic Soviets and then further
inherited by the modern Putin regime oil
was discovered in Venezuela during the
autocratic military dictatorship of Juan
vente Gomez while the oil Industries in
Syria Iraq the United Arab Emirates and
all across Africa were basically handed
over directly from autocratic European
Colonial administrations to autocratic
dictatorships that immediately or very
quickly took over in their place of all
the countries to have ever discovered
enormous oil and gas wealth only a
handful have ever done so while already
being wealthy politically independent
and with stable traditions of democracy
and low levels of inequality and the
only one with a very small population to
have ever done so has been Norway Norway
was thus better prepared to handle the
sudden influx of oil and gas wealth than
most others havean but it still
initially caused the Norwegian economy
to become rapidly undiversified and
dependent on oil and gas anyway
throughout the 1970s and early 80s when
the price of oil was high the oil
dependent Norwegian economy was booming
but then in 1986 the price of oil
suddenly collapsed and with it Norway's
heavily oild dependent economy suffered
its first oil induced recession over the
past six Decades of History going back
to 1960 the Norwegian economy has only
ever shrunk on three occasions in 2020
during the outbreak of the covid-19
pandemic in 2009 during the depths of
the great financial crisis and in 1988
back during the depths of this oil
recession but the Norwegian government
learned a valuable lesson from this
recession in the 1980s it needed to
diversify itself away from the
unpredictable es and flows in the oil
market and so just a couple years later
in 1990 the Norwegian state with its
long history of communal ownership of
resources and Democratic institutions
had the foresight and the capability to
establish the pension fund Global
otherwise known as the so-called oil
fund the fund was established as a
communal Sovereign wealth fund owned by
the Norwegian State and people into
which the Surplus revenues from the
state-owned oil company equinor and
taxes on the oil and gas industry would
be invested into for the benefit of
Norway's future generations and to
diversify the government and economy
away from oil and gas strict rules and
guid lines were established around the
funds operations it would invest heavily
into Global stock markets and real
estate in order to diversify away from
the Norwegian economy and very strict
rules were set into place that no more
than 3% of the funds assets could be
withdrawn in any given year which not
only enabled the fund to continue
growing and compounding with time but
also disallowed the abuse of the fund's
assets by Norwegian politicians who
would otherwise be tempted into
promising to lavishly spend the oil
wealth today at the expense of tomorrow
in order to get themselves elected a
Hallmark of the more autocratic Petra
states where unpopular regimes or
dictators spend the oil wealth lavishly
on their people as a sort of bargain for
them to put up with their
authoritarianism and as the Norwegian
oil and gas industry continued growing
and more wealth was deposited into the
oil fund and as the global economy
continued growing alongside it and as
withdrawals were capped at no more than
3% per year the Norwegian oil funds
steadily evolved from nothing in 1990
into the absolute Behemoth that it is
today currently the fund is by far the
largest Sovereign wealth Fund in the
entire world its current net assets
exceed more than 1 and A2 trillion ion
us and the fund owns an estimated 1.5%
of all the shares of all the more than
9,000 publicly traded companies in the
world and is the global stock market's
single largest investor today making the
fund the world's biggest stock market
whale this is despite the fact that the
Norwegian economy itself only represents
about 0.5% of the entire global economy
and despite the fact that the Norwegian
population only represents about
0.07% of the worldwide human population
and yet they own 1 and a 12% of the
global stock market the oil fund is
currently so massive relative to
Norway's small population that it's
worth approximately
$275,000 per Norwegian citizen if they
decided to ever cash it all out and it's
already reached a point where the funds
conservatively capped 3% withdrawal rate
per year can safely provide for about
20% of the entire Norwegian government's
annual budget in perpetuity giving
Norway the ability to rely Less on the
unpredictable fluctuations of of oil and
gas price Revenue to continue funding
their government operations and
shielding the country from future oil
price collapses now back to Norway's oil
and gas industry the country controls
the 20th largest proven reserves of oil
and the 21st largest proven reserves of
natural gas which have granted Norway
the ability to become the world's 13th
largest oil producer and the ninth
largest gas producer representing about
2% of worldwide oil demand and 3% of
worldwide gas demand but Norway's fairly
modest shares of worldwide oil and gas
reserves and production are reach
absolutely dwarfed by Norway's massively
outsized shares of worldwide oil and gas
exports despite only being the 13th
largest oil producer and only having the
20th largest reserves Norway is
currently the world's eighth largest oil
exporter and is fast approaching the
exports of Kuwait in seventh place
despite Kuwait having 12 and 1 half
times more oil reserves than Norway and
50% higher oil production and it's even
more lopsided when it comes to Natural
Gas where despite only only being the
ninth largest producer and only having
the 21st largest reserves Norway is the
fourth largest global exporter anyway
only just barely behind the big three of
the global gas market the United States
Russia and Qatar the latter of which the
Norwegians are rapidly approaching a
takeover of to become one of the new top
three in the global gas industry now
Norway has been able to achieve this
massively outsized presence in its share
of global oil and gas exports due to
several different factors the first of
which is of course its close proximity
to the energy hungry European union and
its ability to construct subc pipelines
directly from source to Consumer the
next factor is Norway's own small
population that naturally has a lower
energy demand than countries with
similar reserves but much larger
populations like Angola Ecuador and
aeran while the third and arguably
biggest factor is a result of Norway's
own geography and strategically chosen
policies Norway produces enough
Renewable hydr Power through all of its
rivers and dams to power 95% of the
country's electricity demand and in
addition to having the largest Hydro
potential in Europe the country also has
one of the largest wind potentials as
well the coasts around Norway and the
mountains that run along the country's
spine are among the windiest locations
to be found on a continent that is
generally not a very windy place so in
addition to having the seventh largest
installed hydroelectric capacity in the
world Norway already has the 18th
largest installed wind capacity in the
world as well and has a massively
untapped potential here that is only
just starting to grow so in addition to
having pretty large amounts of oil and
gas the country also has huge amounts of
renewable energy potential as well and
they've been using that potential to
their strategic Advantage they
effectively keep all of their renewable
hydro and wind resources in house to
meet their own energy demands
indefinitely which has freed them up to
sell most of their oil and gas resources
that they don't really need to Outsiders
abroad and especially to the energy
hungry EU directly next door and in
addition to harnessing their local Hydro
wind and even geothermal potential to
effectively turn their entire electric
grid into 100% domestically produced
Renewables they're also reducing the
amount of fossil fuels their country
consumes even further by offering
generous tax and financial incentives to
their citizens to adopt fully electric
vehicles or EVS as well as a result a
whopping 88% of all new car sales in
Norway across 2022 were EVS which is by
far the highest market share that EVS
have yet achieved in any country in the
world today and since these proe
policies have been being pursued within
Norway for a long time now nearly one in
every three vehicles on Norwegian roads
are already EVS that don't consume any
oil and are powered instead by the
state's domestic and renewable Hydro
wind and geothermal resources and for
Norway this is about far more than
simply reducing emissions and combating
climate change it's also about National
Security and financial power the more
that the Norwegian electricity grid
became powered by renewable sources from
within Norway the more secure the
country became from having to rely on
foreign energy Imports and Supply chains
and the more of their own oil and gas
resour resources they could sell abroad
and the more cash they could plow into
their Sovereign wealth fund to diversify
their economy further away from oil and
the more EVS they get adopted within the
country that can be indefinitely powered
by their domestic renewable sources then
that even more of their domestic oil
resources they won't need and can sell
abroad as well to continue plowing even
more money into the Sovereign wealth
fund to diversify even more away from
oil it is a cascading strategy that has
been diligently followed in Norway for
decades that is steadily transforming
the country into one of if not the most
powerful and influential States in
Europe it is thus Norway's unique 21st
century philosophy and doctrine that its
oil and gas resources are to be produced
and sold to foreigners while its
renewable resources are to be harnessed
and provided for the needs of the
Norwegian people this clever and unique
strategy has set them up to be capable
of selling and exporting virtually all
of the oil and gas that they produce
while simultaneously being completely
energy independent at the same time
which is how Norway's modest Global oil
and gas reserves and production levels
take up so much more of the world's
total exports and how the country has
gotten so spectacularly Wealthy on the
process the results of all of this
prudence and Decades of forward-looking
strategic thinking all culminated in
2022 after the Russians decided to
invade Ukraine in the aftermath of
triggering the biggest war in Europe
since World War II the European Union
decided to begin shutting down their
previously massive Imports of Russian
oil and gas in order to deny the Kremlin
its primary source of funding for their
War Machine attempting to overrun
Ukraine but of course the EU had to
quickly find somebody else to begin
replacing Russia's previously large
shares of 25% of their oil imports and
45% of their gas Imports and Norway with
its Big Oil and Gas resources right
nearby and its friendly relations was
the best positioned country in the world
to take advantage of the situation and
fill in the demand consequently exports
of Norwegian oil by tankers gas through
pipelines and even liquefied gas or LNG
by tankers all began surging towards the
EU Market to replace the Russians with
Norway's overall share of EU oil imports
rising from 99.5% just before the war to
13.3% in the first quarter of 2023 which
makes Norway currently the eu's single
largest provider of oil Norway's share
of the eu's imported piped gas also
skyrocketed upwards from 38.1% just
before the war to a whopping
46.1% in the first quarter of 2023 while
Norway's share of the eu's imported LNG
Rose from basically nothing just before
the invasion to 6.6% in q1 of 2023 the
Block's fifth largest provider of LNG
now overall and at the same time as
Norway's oil and gas export volumes to a
suddenly desperate EU were rapidly
Rising the global prices of oil and gas
were each rapidly Rising right alongside
them the result of this situation caused
by Russia has been an absolute Financial
Bonanza for the Norwegians the likes of
which has never before been seen the
country pulled in a whopping
$12.3 billion in revenue from their oil
and gas industry in 2022 alone and then
immediately shattered that record with
another
$131 billion in oil and gas Revenue
across 2023 compared to a relatively
poultry $29 billion in oil and gas
Revenue that they earned Before the War
and the energy crisis in 2021 Norway's
oil and gas Revenue in 2023 alone was
roughly equivalent to the entire
Collective GDP of Slovakia and they've
been utilizing their sudden windfall
very wisely they have invested enormous
amounts of it into the Sovereign wealth
fund and tens of billions of dollars
more being invested to explore for even
further untapped oil and gas deposits
that could be found within Norway's far
Northern baren SE that Still Remains
largely unexplored more pipelines are
being built to Europe to expand their
export capacity even further and to
replace the Russians previous market
share even further Norway's increasing
displacement of Russia in the European
energy Market was perhaps best
symbolized in September of 2022 on the
27th of that month a series of bombs
detonated underwater destroying sections
of the nordstream 1 and 2 natural gas
pipelines that connected German
factories and homes directly to Russia's
huge natural gas fields in Siberia both
pipelines were rendered completely
inoperable by the sabotage destroying
Russia's ability to directly export gas
to Germany and then the very next day
afterwards the Norwegians and the poles
inaugurated the opening of the Baltic
pipe Norway's brand new gas pipeline to
Poland that will replace all of the
roughly 60% of Poland's natural gas
Imports that had been coming from Russia
with Norwegian gas instead Norway has
therefore emerged in the 2020s as the
European Union's largest single supplier
of energy and in the future it isn't
likely to be limited to oil and gas
exports either in the future as climate
change progresses it's expected that
precipitation levels in Scandinavia will
actually increase further than what
they're like today which will mean that
even more water will be feeding into
Norway's rivers that Cascade down the
mountains toward the west Coast while
Norway's still largely untapped wind
potential is expected to be expanded to
make the country a global leader in wind
energy as well Norway likely won't need
all of this excess renewable hydro and
wind power for just itself in the future
and so the possibility has already been
raised of building out transmission
lines from Norway to the EU so that the
Norwegians can export their hydro and
wind sourced energy to Europe in
addition to their oil and gas resources
and besides transforming into Europe's
most significant energy Province Norway
will also likely become one of Europe
and the Western world's largest sources
of mineral and rare earth might as well
it's well known by now that the global
push toward a green energy transition
which is being largely spearheaded by
European economies will require vast
amounts of metals and Rare Earth
elements to keep itself going rare
Earths especially are vital materials
that are necessary for Ev batteries
smartphones wind turbines digital
cameras hard drives and tons of other
things that are vital for powering
modern 21st century life and growth
unfortunately though for Europe and the
Western World the vast majority of the
world's proven Rare Earth reserves are
currently dominated by China China
conducts an overwhelming 63% of all the
rare earth mining in the world which is
more than every other country combined
and China conducts an even more
overwhelming 85% of all the world's Rare
Earth processing China controls roughly
a third of the planet's proven Rare
Earth reserves followed up by Vietnam
Russia and Brazil after which there's a
huge gap before Australia comes next
lagging far behind any of the top four
and China has already been weaponizing
its dominance over these Rare Earth
Resources as well in a similar way to
how Russia weaponizes its dominance over
oil and gas in July of 2023 China
declared that they were introducing new
export restrictions on two metals that
are critical for the manufacturing of
semiconductors gallium and Germania in
retaliation to US economic sanctions on
China's semiconductor industry China
currently produces 98% of the world's
gallium and 68% of the world's germanium
so if China decides you can't have them
you effectively just can't and although
neither gallium nor germanium are rare
earth metals they are nonetheless also
still critical to powering modern
Digital Life and so China's export
restrictions on them were meant as a
clear threat that additional metals and
minerals that China dominates could
become restricted in the future as well
but it was around that same time that a
company called Norgay mining in Norway
suddenly made a surprise announcement in
June of 20123 they had just about out of
nowhere discovered by far the largest
reserve of phosphate rocket ever found
in the world and was just sitting there
in southern Norway this whole time the
company has since estimated that this
deposit contains around 70 billion tons
of economically recoverable phosphate
which literally in a Flash doubled the
entire world's previously proven
reserves of phosphate that had sat at 71
billion tons beforehand put another way
this recent Norwegian Discovery is so
vast that it can supply the entire
world's demand for phosphate all on its
own for the next half a century to come
and it completely undermined the
previous dominance over phosphate that
was up to then enjoyed by Morocco who
controls an estimated 50 billion tons of
the resource that equaled about 70% of
the world's proven reserves before June
of 2023 and then was cut down a size by
half to only about 35% of the world's
proven reserves after the discovery in
Norway prior to Norway's gigantic
Discovery it was Morocco and China who
were the largest producers of phosphates
and they dominated the global market for
it phosphates are really important
because they're a critical component
used in fertilizer and Global food
chains and in smaller quantities they're
also similarly used to produce digital
devices and EV batteries and noray
Mining still isn't finished either they
believe that their huge phosphate
Discovery in southern Norway also
contains huge amounts of metals like
titanium and vadium as well metals that
are vital for the construction of
everything from aircraft to computers
and submarines and more at the moment
the production of both metals are
dominated by China who produces roughly
36% of the world's titanium and more
than half of the world's vadium while
vadium is produ is further 99% dominated
by the bricks countries with virtually
all of the world's production of the
metal happening in China Russia South
Africa and Brazil this has meant that
for a very long time the US and the EU
have each had to rely on geopolitically
tenuous Supply chains for their access
to these raw materials that are vital to
continue building airplanes and
submarines and computers and China's
export restrictions on germanium and
gallium show that China could in the
future decide on introducing even
harsher export restrictions on titanium
and vadium as well Norway's probable
massive amounts of both titanium and
vadium could end up granting Europe and
the West their strategic autonomy from
China if norg mining delivers while
Norway is also Now set to become the
world's newest largest source of
phosphates this ultimately means that in
addition to becoming Europe's largest
source of oil and gas and a major source
of renewable energy Norway is also
primed to become Europe's largest source
of many of the rare earth materials that
are crucial for modern Technologies the
green energy transition and AG culture
and Norway is completely undermining the
previous dominance in all of these
industries in Europe that have
previously been enjoyed by more
autocratic powers like Russia and China
Norway is providing the Europeans with
the ability to rely more on the most
democratic country in the world for
their raw materials and less on their
historically large autocratic providers
like Russia Algeria Libya aeran and the
Gulf States which means the Norway is
probably only going to continue growing
richer and richer by expanding their
Sovereign wealth fund even further to
dominate more of the global stock and
bond markets while expanding its tax
incentives to completely Electrify their
vehicles and grid even further so that
they can keep selling more oil and gas
to Europe to continue fueling their
Sovereign wealth fund Norway has
basically discovered the geopolitical
equivalent of the infinite money glitch
and they've wisely set themselves up for
generations of prosperity for every
Norwegian citizen for years to come now
there's a lot of data that goes into
producing these kinds of videos when
whether it's showing how Norway and
Russia compete for the oil and gas
market in Europe what Norway's wind and
hydroelectric potentials look like how
Norway's small population Stacks up
against larger city states are showing
how China dominates the rare earth
metals industry the ability to visualize
raw data like this on the map is exactly
what makes learning the stuff so
fascinating to me and it's why the
exploring data visually course is one of
my favorite courses that I've ever taken
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