01/20/25 - Oil Revenues

 I recently read a British Broadcasting Corporation (BBC) article touting Norway’s progress in switching to electric vehicles (EV). One third of cars on Norwegian roadways are EV’s. In 2023 82 percent of new cars sold were EV’s. The EV craze has been created by massive government incentives favoring EV’s over conventional vehicles.

Prior to 2023 Norway waived their Value Added Tax (VAT) on electric vehicles. In 2023 it started phasing them back in but still the penalty to buy a conventional vehicle is onerous. A new BMW iX costs about $61,000 in Norway, before fees and taxes. After 2023 fees and taxes are added the cost is about $73,000. An equivalent priced non-electric car would cost $87,400 after the fees and taxes are added. Basically Norway forces non-electric car owners to heavily subsidize the purchases of electric cars.

During the 1970’s Norway realized that its North Sea oil and gas represented a source of untold wealth waiting to be extracted. They instituted a policy of “drill baby drill”. In the 15 year period, 2000-2014, Norway’s government petroleum revenues totaled $576 billion ($105,000 per citizen). The total for 2022 & 2023 was $213 billion ($38,700 per citizen). In 2023 oil exports accounted for 62 percent of the value of Norway’s exports.

Norway has what it calls its Sovereign Wealth Fund, funded mostly with oil export revenues. The fund has a balance equivalent to $330,000 per Norwegian citizen. (For comparison purposes the US Social Security Trust Funds balance is $8,200 per citizen.).

Norway currently has 8,100 million barrels of proven oil reserves waiting to be extracted for the betterment of Norwegian citizens. The United States has 74,000 million barrels waiting on a government that is willing to use our resources to our benefit.

In 2022 China issued permits for more new coal plants that at any time in the prior seven years. The number permitted in 2022 was the equivalent of opening two new coal fired power plants every week.

The average US retail price for electricity in October 2024 was 16.94 cents/kwh, it was 12.8 cents/kwh in December 2020, an increase of 4.14 cents/kwh.  Previously it took from 2003 to 2020 to get a similar increase. Green energy may be great, if we can afford it.

PS. We hear a lot about sanctions on Russian oil. Since their war on Ukraine began in 2022 Russia has exported (meaning someone has purchased) $472 billion worth of petroleum products and $145 billion worth of natural gas products. Over 40% of the value of their exports is fossil fuel products.

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