The precipitous drop in oil prices and the ensuing economic crisis in Alberta have the normally hyper-conservative Calgary Sun comparing energy policies in Alberta and Norway—and shining a positive light on Norway.
“It’s Alberta, only with Vikings and common sense,” blared a Sun headline in early January. “Both derive a large proportion of government revenues from the oil and gas sector, with high exposure to the positive and negative side-effects of swinging oil prices,” Leong writes. “Therefore, governments in both jurisdictions squirrel excess revenues away, saving money for a rainy day.”
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But “whereas Alberta built itself a gravel back road riddled with potholes, Norway built a freeway paved with black gold.” The result is that Alberta has a $17.4 billion Heritage Savings Trust Fund to fall back on whenever the oil boom goes bust. Norway’s Oil Fund holds NOK5.661 trillion, or C$870 billion at current exchange rates.
“That was not a typo. $870,000,000,000.”
Notwithstanding differences between the two jurisdictions, “Norway’s experience provides a vivid illustration of how state energy wealth can be managed to shield the public purse from economic temper tantrums,” Leong writes.
“Despite Norway’s vulnerability to oil swings, that country’s prime minister said last month short-term economic turbulence wouldn’t affect long-term economic plans, which include tax cuts and no big changes in government operations…Clearly, this province would do well to study how Norway and other energy-driven economies deal with their wealth.”
