How UK lost its oil wealth but Norway didn’t

Norway and the UK were having the largest oil sources in the north sea but their approach towards it is very different. It seems like a blessing for Norway whereas it is not that beneficial for the UK. Let's see how it became a blessing for Norway and how it has less impact on the UK.

During the period after the 2^nd world war, almost every western European country was digging for oil in every way they can but that only resulted into less than 100 barrels of oil per day whereas if you see Middle eastern country they have managed to develop 3000 barrels of oil a day.

The condition of both the countries before they found out oil

First oil resource was found out in the year 1962. Before that Norway was not that much developed as the country have 2 major resources of money that are fishing and shipping in which they are very good.

In the other hand, we have seen that British was building its empire but the main thing is they rely too much on oil but actually they didn’t have that much oil. So it has to rely on exports that’s why they support the global expansion of Shell and BP.

Searching and finding of oil

As we see during the 20^th century no one has ever thought about that north see will be a keeping such a vast resource of oil whereas it is very much difficult to know that there is oil.

In 1958 Norway government started searching and oil in different parts. On 1959 there is a finding that changed almost everything in this industry.

In the northern part of Netherlands Shell was in search oil, they didn’t find but from one of their wells they got a resource of natural gas and when they tried to dig some more wells they noticed that they have discovered a large resource of natural gas and later this was the largest one of whole Europe(Groningen gas field).

Now the geology of both the area is so similar to the geologist said there must be oil on the north sea.

Trouble to extract the oil

The government tried to extract the oil in 1965 but they have already found the source in 1962. The uncertain North sea and advanced technology were clashing with each other to get the oil.

The drilling machines should be able to survive the waves of 15 meter and also the winds of 110km per hour. It took a few years and several deadly accidents and after that, in 1969 they could able to extract the oil.

After one year the British government also find the largest oil resource in their region in 1970. Now both the party have a big opportunity but the approach of both the sides was different.

What Norway did?

The political party of Norway was labor party and they were ruling from 1927 so they were actually thinking about the improvement of the country is that.

Their approach towards the privet company was very aggressive and the main thing is that they keep and condition that 50% of ownership is of the government.

In 1972 they took it a step further that and then they made a state-owned company which is competing with other global companies.

This was a great strategy and they just not only have the power to manage the tax but they also have that ownership.

But the most important fact is what they did with that money. They not just only saved it but also invest that money in several different regions. Most of their money is in stocks and bonds and they are getting good revenue each year.

What England Did?

Margret Thatcher Who was the prime minister of UK in 1979 makes the decision to invest the money they get from the oil to increase the economic condition of the country instead of investing the funds for further profit.

She takes an era of great privatization and put taxes on it to make more growth in the country. That was successful in the first place and that showed a large economic growth.

But it was not for a long time as the revenues of the oil were declining Margret Thatcher house of cards fall down.

Both the company used different strategies approach to their similar kind of solution but Norway did something differently and results were showing the signs of success but if you think about the UK it was just an opportunity they totally miss out.

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