
Norway Is Walking Away from Billions of Barrels of Oil - pseudolus
https://www.bloomberg.com/news/articles/2019-04-08/norway-is-walking-away-from-billions-of-barrels-of-oil-and-gas
======
marcus_holmes
It's not like the oil is going anywhere, either.

I can imagine a point in 30 years where there are new, safer and better ways
of getting the oil out, and oil is necessary for processes that don't involve
burning it into the atmosphere, and the price is considerably higher than it
is now.

I despair of (my current home country) Australia's attitude of digging up all
the resources it possibly can and selling them for cheaper than everyone else.
And being proud of this, like it's a good thing. These resources are
irreplaceable and belong to the whole nation. Maybe leave some in the ground
for later when the prices have gone up?

~~~
bryanlarsen
Everybody assumes that oil prices are going up. However, there are several
large effects that could cause the price of oil to decline.

1\. Economics predicts that the price of something will be the same as the
price of its cheapest substitute. For a long time, fossil fuels were the
substitute, keeping the price of renewables & nuclear down to unprofitable
levels. However, renewables, storage and electric cars are all rapidly
decreasing in cost, depressing their prices and the prices of their
substitutes.

2\. Carbon taxes or other similar schemes are looking more likely in the
future. They shift the demand/supply curve, causing fewer barrels to be sold
at higher prices, but the price doesn't go up enough to cover the full
increase, leading to depressed prices before the tax.

3\. Economics says that the price of a commodity is the same as the marginal
cost of production. In other words, the highest cost producer of oil that
meets current demand makes $0 in profit, all lower cost producers make >$0
profit. If demand is low, then that marginal cost is $10 Saudi oil. If demand
is high, then that marginal cost is $100 Canadian oilsands oil. So if demand
drops because of climate change mitigation and/or renewable substitution
and/or electric vehicle substitution, there is supply of lower cost oil,
meaning prices can drop.

4\. We're not running out of oil, we never have been. As mentioned in #3, the
price of oil is the marginal cost of production. Anything that costs more than
that price isn't counted in reserves because it's uneconomical to extract. So
by definition we always have almost no reserves and never will have.

There are trillions of barrels of oil in the Canadian and Venezuelan oil sands
alone that aren't counted as reserves for this reason. We're less than 2 price
doubling periods away from making this economical, keeping a fairly low
ceiling on prices.

And of course technology marches on, continually decreasing the price of
extracting that oil...

~~~
alphakappa
Let’s not forget that oil is not just used as an energy source. It’s the basis
of plastics, drugs, cosmetics and many more things, not all of which have
substitutes.

~~~
beat
How much oil is used in manufacturing materials, though, rather than as
energy? I suspect that's a small percentage.

~~~
antisthenes
About 12-13%, according to this:
[https://www.eia.gov/energyexplained/index.php?page=oil_home](https://www.eia.gov/energyexplained/index.php?page=oil_home)

And most of that is lubricants and plastics. I think we can all agree that
reducing our use of plastics is generally a good thing overall - we might make
the switch back to more easily recyclable materials, e.g. aluminum and glass,
which, although energy intensive to recycle, are almost endlessly renewable.

Not sure what good substitutes for oil based lubricants would be.

~~~
beat
The primary problem with petroleum is greenhouse gasses, so I'm far less
concerned about its use in plastics than I am in its use for fuel.

------
DerJacques
I can't help but being impressed by Norway and the decisions they have made in
regards to their oil.

It would be very easy for the country to rely on their oil only, and forget
about everything else. But instead, they realise the importance of renewable
energy and try to build a sustainable future.

~~~
nwatson
They have an Iraqi immigrant [1] to thank for their far-sighted policies.
Farouk al-Kasim moved to Oslo in 1968 for family health reasons and was in the
right time and place to help steer Norway's national policy toward unexpected
oil wealth shortly after.

(Edit: link to article below doesn't work well through Google indirection ...
And search for original at Financial Times website is paywalled ... apologies
... search for article title "The Iraqi who saved Norway from oil", you'll
find a readable link.)

[1]
[https://www.google.com/amp/s/amp.ft.com/content/99680a04-92a...](https://www.google.com/amp/s/amp.ft.com/content/99680a04-92a0-11de-b63b-00144feabdc0)

~~~
maaaats
I linked to it this weekend, and it ended up as a top-level post on HN
yesterday:
[https://news.ycombinator.com/item?id=19594153](https://news.ycombinator.com/item?id=19594153)

------
gnud
Hurray! The labour party (finally) voted against drilling for oil outside
Lofoten, Vesterålen and Senja, in the very north of Norway, near to or above
the arctic circle.

This has been a long fight for the enviromental lobby. But really, it should
have been obvious.

We _know_ that if we want to limit global warming, we can't even extract all
the oil from currently developed fields.

In addition, an oil spill outside Lofoten could devestate the cod population
of the north atlantic ocean, and destroy industries both in Norway and
elsewhere.

~~~
michaelangerman
Now all we have to do is convince the politicians in the US to walk away from
their (perceived) oil as well off the coast of Alaska.

~~~
yostrovs
This is actually excellent news for America's drillers, as reduced global
supply will bolster prices and motivate more drilling in the U.S. And that is
all this Norwegian decision will actually do: move production from one place
to another. The people of Texas, North Dakota, Alaska, and a few other states,
extend their thanks to the Norwegian parliament.

~~~
gbear605
If it increases prices, then fewer people will buy oil, causing less oil to be
drilled.

~~~
HeWhoLurksLate
That doesn't mean _less_ people need fuel, though...

~~~
saalweachter
It _potentially_ means fewer people will need petroleum fuels.

Petroleum fuels are only the only game in town for _some_ of their
applications. For everything else, raising or lowering the price relative to
the alternatives will cause switching to or from petroleum fuels. This is
going to be lagging (because there are usually capital costs associated with
the switch, so it doesn't make sense to switch if you won't recoup the
expense, so the fuel cost difference needs to be substantial), complex
(because the switching will actually be based on the perceived future price
difference, not the current price difference) and somewhat sticky.

------
spodek
In the first month of my fourth year since I chose to live by another
environmental value of not flying -- which has become one of the best
decisions of my life by improving it beyond any expectations -- I look forward
to more nations, organizations, and people choosing similarly.

More of us keep finding that unquestioned following the values of a system
created in ignorance that we could lower Earth's ability to sustain human life
and culture doesn't make us happier.

Taking responsibility for how our behavior affects others doesn't sound as
much in-the-moment fun as most of the crap that burning fossil fuels does, but
it builds community, personal growth, and enduring emotional reward.

I used to crave eating mangoes in the tropics and seeing as many of the
world's sites as I could. Now I see the bigger issue wasn't the mangoes or
sites, which were passing fancies, but the craving, which the oil industry
shows in the article. Life in service of others, compassion, responsibility,
and such outweigh whatever profits they get abandoning them.

I can give their past generations of pollution the benefit of the doubt for
our collective ignorance. The evidence of the result of their craving is
overwhelming now. I hope they escape that craving in favor of responsibility
and humanity before my home, and the homes of billions of others, is
underwater.

~~~
immad
It would be fairly easy to fly and pay a carbon offset to the equivalent of
your flight.

------
gersh
It's the right decision. If we keep extracting every last drop of oil, the
effects of climate change are going to irreversible (see
[https://www.theguardian.com/environment/2018/oct/09/tipping-...](https://www.theguardian.com/environment/2018/oct/09/tipping-
points-could-exacerbate-climate-crisis-scientists-fear)). If less oil is
extracted, the price will go up, and that will hasten the transition to
renewables.

------
philip1209
This is possible for them because they have saved their oil profits and turned
it into a $1 trillion sovereign wealth fund:

[https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor...](https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway)

~~~
jwr
Yes. On the other hand, other countries with oil have not saved their oil
profits, choosing to spend them on a massive military (US) or trivia (Saudi
Arabia building fancy cities in the desert).

There are lessons to be learned here, perhaps?

~~~
randcraw
Alas, America doesn't believe in learning from its mistakes.

~~~
village-idiot
Or anyone else’s for that matter.

------
14
This is our kids earth. I think my kids are smart and I know they will demand
change. I will be at their side. The time to make sacrifices is now and this
makes me look towards Norway with envy that they would choose environment over
money. Good job. Climate change is real.

~~~
jwr
Problem is, it might be too late. The time is indeed now, and yet the
countries best positioned to make the change (both largest polluters per
capita and richest, so able to make the sacrifices) are pretending the problem
does not exist, for the sake of short-term profits for a selected elite.

I find this incredibly depressing. Should I teach my daughter to ski? Is it
going to be of any use in 20 years?

~~~
whatshisface
Present models do not predict that ice will go away in 20 years. +2C in 2060
is catastrophic for many reasons but it will not abolish snow.

------
cmrosenberg
The post title gives the impression that parliament have decided permanently
to never refine oil in the area. That's misleading. The Norwegian Labour Party
has decided for the time being to not support the preliminary processes needed
to start potential oil production in the area. The significance of this being
that the power balance in parlament has shifted for the time being. However,
this can change in the future!

------
rdiddly
Whoever wrote this headline might also be responsible for these:

Captain Chesley "Sully" Sullenberger Is Walking Away from 155 Opportunities to
Kill Someone (2009)

Steve Wozniak Is Walking Away from Thousands Of Dollars in Hewlett-Packard
Salary (1976)

 _Homo Sapiens_ Is Walking (Literally) Away from Brachiation and Dominion Over
the Tree Canopy (-1,000,000)

------
jnty
It's pretty depressing to think of all the extremely talented people working
their socks off to find oil fields, directed to do so by fools who don't
realise we can never safely use them. It would be much better if they were
working on sustainable technologies instead.

~~~
smolder
You say that like "not now" is "never". What is depressing is that people
would rather let the tragedy of the commons and collapse play out at full
speed, rather than giving ourselves a chance at achieving better
sustainability.

~~~
jnty
I think we agree? There's a huge amount of effort being spent on extracting
fossil fuels which will destroy our planet which could reasonably be used to
develop sustainable technologies instead.

~~~
smolder
Sorry, I think you're right and I just read a sentiment that wasn't there.

------
paulsutter
People get all activist about supply (drilling, pipelines), but the only way
to affect emissions is to change demand. Stopping one point of supply just
diverts demand to elsewhere.

~~~
graeme
It shifts the supply curve left. It is hard to emphasize how valuable that is.
It:

1\. Raises prices or decreases total used

2\. When prices are raised, encourages alternatives

It is similar to a carbon tax in its effects. Look at the diagram in the
article and visualize the S curve moving left, and what effect that has on
equilibrium.

[https://en.m.wikipedia.org/wiki/Supply_and_demand](https://en.m.wikipedia.org/wiki/Supply_and_demand)

~~~
nintendo95
Americans will just drill more.

Here is the thing: the US will be net energy exporter by 2021. As of now it is
self-sufficient. At the time when we put such a emphasis on using less fossil
fuels, we also have more and more countries producing the stuff.

All it did (Norwegians not drilling) is raised prices for the oil exported by
the US. Thank you! Recently it has been very cheap. Hopefully this will help a
bit.

So that's global perspective.

The local perspective I'm happy that Norwegians are so wealthy they don't need
to drill as much anymore or can focus on other issues then providing to the
Sovereign Fund. Good for them!

~~~
Scarblac
> Americans will just drill more.

AFAIK Americans already don't plan to leave oil in the ground if it's
economical to get it out. They can't drill more if they're already going to
drill it all.

------
ensiferum
Great decision by Norway. I hope this (and other decision that'd follow suit
elsewhere) would precipitate the R&D and subsequent implementation other
energy technologies. And that the existing oil drilling could be left for
using oil in petrochemical products instead of as a energy resource.

------
kwhitefoot
With luck this will be the start of a process that works out what to do when
oil is no longer a profitable business. It was good while it lasted and Norway
managed it much better than any other country in my opinion, with care it can
last a while yet but inevitably things will change.

We need to work out what we will do to maintain our lifestyle without the oil
income, if not then Norway will slowly drift back to being a relatively poor
country. Norway is an expensive country to run, not just because we have high
incomes but also because quite a lot of the landscape is quite hostile to life
and unproductive both industrially and agriculturally. The population is too
small to make mass production of low cost export goods practical and raw
materials are expensive to extract and refine so we will have to become more
self reliant. Historically Norway has been good at this but recent governments
have started to be less and less interested in solidarity and more interested
in market ideology.

For me it is probably not a particularly pressing problem, I'm 63, but my
children will certainly be affected.

------
dalbasal
The way Norway's oil fund works makes these decisions easier.

All the oil money goes in a sovereign wealth fund. 4% of the fund's value per
annum is taken as government revenue (like tax). So, any new oil found will
only gradually increase budgets in the future. Also, the can stop drilling now
and the annual revenue just stops growing (unless the market). It doesn't
shrink.

Forethought.

~~~
throw0101a
> Also, the can stop drilling now and the annual revenue just stops growing
> (unless the market). It doesn't shrink.

Actually: if you're taking out 4%, but various investments are bringing in
>4%, then the principal will continue to grow.

------
jwr
Finally we're seeing some reason! It seems that not all of humanity is stupid
enough to go straight for self-extinction. The problem is, while Norway does
this, there are other countries (ahem, the elephant in the room) and multi-
national corporations that plan to increase oil production massively in the
coming years.

------
simen
What Labour actually decided against was not oil exploration, but rather a
_konsekvensutredning_ , or an investigation into the possible environmental
and social effects of oil extraction in the area. Which is in many ways a more
radical position, as they are not even interesting in finding out what
possible damage oil production might cause. They're rejecting the _preliminary
step_ before oil exploration, which is in turn the preliminary step to actual
oil extraction.

Of course the current government never had any plans to conduct any
preliminary steps. The two major parties (the Conservatives and the Progress
Party) are all for it, but the minor supporting parties (the Liberals and
Christian Democrats) are not, and so far they've gotten their will.

------
bartimus
> Yet he last week also said that he wants oil companies in Norway to commit
> to a deadline for making operations completely emissions free.

Emissions free oil production. Oh, the irony.

------
chris_mc
>“There needs to be a balance”

Sure, so then since the pendulum has been on one side (polluting the world
with fossil fuels) for so long, let's swing it over, in order to be
"balanced", and ban/eliminate fossil fuels as soon as possible, hopefully in
the next 10-20 years.

~~~
alacombe
... and welcome recession like we've barely known before. You won't power the
supply chain urban cities rely on with PV / wind alone. Crop will suffer, and
_a lot_ of people will die, those in cities first.

------
lifeisstillgood
Dumb question, but when temperatures in 2050 / 2100 hit 3% over pre-industrial
levels, what happens to Norway's climate? Will they, as well as the huge
sovereign wealth, also land up in a nice temperate country with green and
pleasant meadows.

Just jealous I guess ...

~~~
drak0n1c
If warming does reach that level then yes, there has been some research
finding that it would be overall be good news for Canada and Russia (and
presumably Norway too).

------
influx
What ever happened to peak oil? it wasn’t that long ago that this term was
everywhere.

~~~
hinkley
We tried to have a peak oil in the 70's and 80's and we got improved catalytic
cracking processes (google zeolites), and I believe we also got sideways
drilling and (someone with a better memory, help?) ground penetrating radar
during that era.

So we located more oil, we could get more of it out of the ground, and more of
it made it to your gas tank.

Since then people have made the zeolites many times larger in diameter. I've
no idea why that improves efficiency but that's the claim.

However through all of this the amount of energy to refine one gallon of
petroleum has gone up and up. That's one of the complaints about tar sands.
For some of those the yield is a 10:1 ratio (one gallon to produce 10),
whereas we used to be many multiples of that ratio.

------
cfv
Good. Long term habitability of this world takes precedence over short term
profit.

------
PeterStuer
Apparently Norway's government hasn't been bought out by neo-liberalists.
Apparently Norway's people are among the happiest on earth.

Coincidence?

------
bunnycorn
Oil is an heck of a drug.

I conclude that there's no win for Norway whatever happens. I am deeply sad
because I see good in Norway and that's a rarity.

------
kyleblarson
Pretty easy to do once you have a trilly in the bank.

~~~
jwr
You have a trilly in the bank because you were smart enough to save it,
instead of spending it.

------
leandrod
Labour party is due to a rude awakening when people realise they did not get
to labour…

------
veritas213
this article is kinda misleading, norway is still drilling for oil CLOSE to
the arctic, it just stopped short of the 'natural wonder' areas.

------
jhfdbkofdcho
For now

------
coenhyde
There's a Netflix series called Occupied based on the premise that Norway
stopped producing oil & gas for environmental reasons. I watched a few
episodes before getting distracted, as you do with Netflix.

"Occupied depicts a fictional near future in which Russia, with support from
the European Union, occupies Norway to restore its oil and gas production, in
response to a Europe-wide energy crisis caused by the coming to power of
Norway's Green Party, which stopped the country's oil and gas production."
[https://en.wikipedia.org/wiki/Occupied](https://en.wikipedia.org/wiki/Occupied)

~~~
gdy
It is russophobic.

The idea of Russia invading Norway to resume Norwegian oil production because
the EU asked it is absurd.

Were it to happen in real life, Russia would be applauding Norway for rising
the oil price and ramping up its own oil production as much as it can.

~~~
pluma
If history teaches us anything, it's more likely that the US would intervene
against Norway to privatize its oil market with the "help" of US companies.
But being a quasi-EU country and NATO member that's still a very unlikely
scenario.

~~~
jessaustin
I loved the show, and Russia was obviously a metaphor for the actual nation
that invades for oil on a regular basis. There really are some things you
can't say and get a TV show made. This is irony: speaking two messages to two
audiences.

Of course, there's also an audience for unflattering caricature of Russia.
Besides there is some leftover animosity from historical invasions. Also a
Russian invasion looked more exotic on the screen. Our screens are already
full of American culture.

~~~
prolepunk
By definition 'exotic' means something unusual. Russian invasion is anything
but that.

[https://en.wikipedia.org/wiki/Transnistria_War](https://en.wikipedia.org/wiki/Transnistria_War)

[https://en.wikipedia.org/wiki/Russo-
Georgian_War](https://en.wikipedia.org/wiki/Russo-Georgian_War)

[https://en.wikipedia.org/wiki/War_in_Donbass](https://en.wikipedia.org/wiki/War_in_Donbass)

[https://en.wikipedia.org/wiki/Annexation_of_Crimea_by_the_Ru...](https://en.wikipedia.org/wiki/Annexation_of_Crimea_by_the_Russian_Federation)

~~~
jessaustin
ZOMG I had never heard of any of these events of the last several years! The
news media has failed me by only hyping this kind of thing 23 hours a day!
What good fortune that I've had this opportunity to learn from you! Now I will
support all of our meaningless unnecessary wars, starting with Venezuela where
I'm assured that there really is an actual "humanitarian crisis"!

Actually this wasn't a geopolitical point. It is simply a fact that Russian
food, music, and other cultural indicators are less common on TV than American
culture is. So, it makes for more interesting TV. That's all "exotic" meant.

------
drinkcrudeoil
The narrative of this article is just horrendous. Seems like it was sponsored
by the Norwegian oil industry

