Reading The Trillion Dollar Baby

• Norway becomes an independent nation in 1905
• In 1909 - After three years of political turmoil, parliament passes the final version of the ‘concession law, which ensures that Norway’s natural resources, principally hydro, would revert to the state when developed by foreign investors.
• In 1973 - Arab oil producers had formed the cartel known as the Organization of Petroleum Exporting Countries (OPEC), which slashed production and triggered a quadrupling of oil prices, thus ending a halcyon era of abundant fossil fuel.
• Norway population in 1974 - 3.85 million people
• 1974 - Lots of oilfields around Norway being discovered since 1969.  Firm and wise stewardship of this endowment was called for.

In the five years since oil was discovered in 1969, Norway had learned a great deal about the powerful oil industry and it was now ready to extract the maximum possible share of revenue. It had set up a national oil company and given it a mission to generate direct ownership and profits for the state, and to drive the involvement of locals in the development of the industry. It had created a policy that allowed the state to take a direct equity stake in oilfields should they prove to be very profitable, without having to invest in the exploration costs. It was what might be known as a cake-andeat- it policy. But on the revenue front, the existing tax regime still meant that any super profits would be collected by the companies, not the government of Norway.

So in 1974 - finance officials explained that companies would now pay a special tax of 40 per cent on top of Norway’s already high corporate tax rate of 50 per cent. 

Despite Norway’s boldness, Big Oil kept its rigs in Norway’s part of the North Sea, known as the  Norwegian Continental Shelf (NCS), because the region remained an attractive place to invest and because it could gain no support from Norway's conservative party. Even though conservatives are traditionally great advocates of lower taxes, Norway’s conservatives agreed with the higher rate and refrained from political opportunism. This is remarkably different to what has transpired in many other countries, where oil companies have been able to win support by dividing and conquering the political class. Even to this day, both sides of Norwegian politics remain firmly in favour of the tax regime.

Unlike other resource-rich countries, Norway was showing how to become the master rather than the servant of resource multinationals. That November 1974 meeting was a decisive step along the way towards reaping the maximum national benefit from the country’s resource wealth.

As a society, Norwegians have remained true to the sentiment put to visiting oil executives in the late 1960s of wanting to eschew the euphoria of oil riches. This record is all the more remarkable because many other countries, and not just poor ones, have blown their boom-time windfalls on largesse, whether in the form of grand edifices, military hardware, white elephant ee or cash splashes for swinging voters.

• Oil has been a problem for middle and low income countries. But other developed countries have also not managed it very well. Examples of UK bailout. US, Canada, Australia - can't be said to have astutely managed it.
• Norway is alone in the developed world in having successfully kept most of the windfall from its oil and gas wealth — 90 per cent of cash flow now accrues to the Norwegian state.* And only Norway has set up sound institutions to manage this boom-time bonus for generations to come
• Written in 2016/17:  At the start of its oil era, Norway was a middle-income country with a per capita GDP just ahead of Greece, and by the end of the 1970s it was heavily indebted to the rest of the world. Its net foreign liabilities as a share of GDP peaked at 40 per cent. But its effective taxation and disciplined savings strategy have since turned it from a net debtor into one of the world’s biggest creditors. Its net foreign assets are worth 185 per cent of GDP, or around $760 billion, and they’ve risen even more sharply when converted back into local currency as a result of Norway’s flexible exchange rate (one advantage of not being part _ of the euro). During a twenty-year period of relatively high oil prices, Norway salted away $870 billion in a long-term sovereign wealth fund. Despite lower oil prices, the fund is still growing and is on tratoc hikt $1 trilliin o20n20 .
• Other developed countries have not fared thus. Even after resource boom, they have ended up with increased debt numbers.  
• Norway offers the best example in the world today of how to govern extraction of non-renewable resources, but it is by no means perfect. The country made mistakes in the early years by allowing development to run ahead of safety, leading to the loss of many young lives in the 1970s and 1980s. The focus on onshore development involved high risks that pushed the technological frontier and led to massive cost blow-outs. The country is now licensing new development in the Arctic region, which is questionable on both technical and moral grounds. Norway can also be criticised for relying too heavily on oil production, which has meant that about one-quarter of its national income has been directly or indirectly tied to a single commodity. But there’s a great deal that can be learned from the Norwegian experience. Its long-term strategy and firm management,
• Norway is the small country that’s become the big exception to the resource curse thesis.

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In the second chapter, the book dives into the history of Norway. How for 400 years it was either under Danish or Swedish rule before 1905 independence. How it was poor (Munch as an artist from poor Norway). How it began ship building, to diversify its basic economy. Then 1940s, Germany, and the resistance movement. Hauge. Defence Capability. Post war, 18 years of labour rule. The desire to save for future. Until the 1970s when the discovery of oil. 

Instead of unleashing an oil boom, Norway adopted a policy of controlled development and moderation so that the country could develop private-sector capacity and government institutions to benefit fully from its new-found wealth. As Hauge and his team of confidants saw it, Norway needed to do much more than produce another commodity — the oil should be used to help the country to industrialise and generate lasting returns. This was the genesis of a strategy that would handsomely reward Norway for decades to come.

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