Knut Anton Mork
Norway, being one of the major oil producing countries outside of OPEC, has seen a record financial windfall the last couple of years, as oil prices have shot to ever higher levels, most recently
above $72 per barrel, prices not seen since
Hurricane katrina shut down part of the Gulf of Mexico off shore production. Economists are now of the opinion that crude prices in all likelihood will remain high for the foreseeable future.
On the financial site N24.no (Norwegian text) chief economist at Handelsbanken, Knut Anton Mork, is quoted as saying he and his colleagues expect the price to hover around $70 per barrel through 2008, and then $65 per barrel through 2013. He believes prices would retain their level even were it not for the rumblings of conflict with Iran.
One of the main reasons is the growth in demand from the Asian economies in recent years. But perhaps more important is the disappointing production numbers coming in from the non-OPEC countries. Not enough new fields of any heft have been struck or come online to supplement the ageing fields in the Middle East. "Peak Oil", a subject
covered at length by French banker and editor of
The European Tribune,
Jérôme Guillet, might well be upon us.
To illustrate just how much money this will inject into the state coffers: The federal budget for 2006 is premised on oil prices of 350 Norwegian kroner per barrel. $70 per barrel corresponds to about 448 kroner, and the added profit, if this price level were to remain through the year, would amount to 70 billion kroner.
The Department of Finance has calculated that with oil prices at 350 kroner per barrel, the national oil fund [now re-christened The Social Security Fund, Pensjonsfondet], will grow to north of nine trillion, nine thousand billion, kroner by 2030. If crude prices were to remain above 400 kroner per barrel, the forecasts change drastically, and the fund will be even larger.
It's doubtful whether the Norwegian government appreciates the "financial aid", but Iranian President
Mahmoud Ahmadinejad today stated that
in his opinion crude oil prices were still below their
"real value".
"The global oil price has not reached its real value yet. The products derived from crude oil are sold at prices dozens of times higher than those charged by oil-producing countries," the report quoted Ahmadinejad as saying.
The Norwegian oil field Ekofisk in the North Sea
While the elevated oil prices may elicit chuckles in government offices in Oslo and Tehran, for
oil importing countries it's nothing short of
a nightmare.
It's not exactly cause for jubilation among private consumers either, even ones in the oil producing nations. In Norway, where taxes on petrol were high to start with, the recent rises in price have brought the sticker shock at the pump to 15 Norwegian kroner per litre. That means roughly $8.84 US per gallon...
Having lived in the US for a number of years, I think I can safely say that at those prices, you'd see a second American Revolution.