Some people call Alaska the Norway of the United States, and for good reason. Both countries share similar features like Arctic climate, oil wealth and tourism, but despite this, Alaska has a $50 billion permanent fund compared to Norway’s massive $900 billion sovereign wealth fund. What are the biggest similarities between Alaska and Norway? And what are the differences?
Can you tell whether this is Alaska or Norway?
When it comes to landscape and climate, Norway and Alaska are quite similar. The polar climate, thick forests and tall snowy mountains are all traits that the two countries have in common. The smaller similarities include things like tourism, fish resources and so on. When we start to look at the differences between the two, is when we truly realize that these two countries are not the same.
Since the discovery of North Sea oil in Norwegian waters during the late 1960’s, exports of oil and gas have become very important elements of the economy of Norway. The first successful extraction of oil was done the 23rd of December 1969, at the oilfield Ekofisk™. Norway’s Geological Survey had clearly stated that no oil or gas was extractable at the Norwegian continental shelf. Despite going against the odds, the Norwegian oil company Ekofisk™ started drilling in the Arctic Ocean. The effort paid off, and the decision to drill that night before Christmas Eve is the main reason Norway is such a wealthy country today.
The happiness didn’t last last forever though. In the late 1990’s, the price of oil went drastically down. The closing price for a barrel of crude oil sold on the New York Mercantile Exchange on December 31st in 1998 was $12.05. Just three weeks earlier the price of oil had hit its nadir for the year at $10.72. Oil had started the year above $17 and steadily slid as the Asian financial crisis slowed the world economy and reduced oil.
A decrease of this scale is what the oil economics is facing now. And as the demand for oil decreases, shortage is starting to become a more urgent problem. The fossil fuel isn’t coming from an infinite source. Eventually it will be emptied.