Tag Archives: oil revenue

Sticker Shock! The Cost of Living in Norway

by Carrie Levesque

220px-The_Scream

Edvard Munch “The Scream” (1895).

When I first moved to Norway and started brainstorming blog topics, I knew I had to write one on the cost of living, a matter that shocked me daily our first month here and still manages to shock me seven months in.  Sure, I’d heard talk of Norway as one of the most expensive countries in the world, but talk does little to prepare you for the reality of a $7 carton of eggs, a $4 half-gallon of milk or chicken at nearly $10 per pound.

I was also quite surprised at my options the first time I needed cash.  The smallest withdrawal you can make at a Norwegian ATM is the equivalent of 70 US dollars.  The next smallest amount: $175.  Norwegians walk around with some serious Benjamins in their pockets (or Munchs, as the case may be).  Norwegian expressionist painter Edvard Munch’s image graces the 1000 kroner ($175) banknote.  I suspect his famous painting The Scream, thought to represent “the universal anxiety of modern man,” in truth depicts the anxiety of foreigners shopping for necessities in Norway (I just paid WHAT for that?).

1000 Kr Note With Portrait of Edvard Munch

1000 Kr Note With Portrait of Edvard Munch

But over the last few months, I’ve adjusted and mostly started to see things more as the locals do.  As a Scottish friend who’s lived here 11 years recently advised me, “Never complain to Norwegians about how expensive things are here- that’s just BORing!”

American translation: “It is what it is, so it’s stupid to complain about it.”

And she’s right.  After researching on the web, not entirely successfully, why the cost of living in Norway is so high (it’s more than just the high taxes), I came across more interesting perspectives on Norway and its economy.  Like how it is, at a time when the rest of the world is flailing through a seemingly interminable economic crisis, the Norwegian economy is going strong.  Unemployment is around 3%.  Real estate prices are on the rise.   Signs of poverty are extremely hard to find in this country, where everyone gets a good education and there are no low-wage jobs.  (Go on, take a moment to absorb that: There are no low-wage jobs in Norway.  Entry-level jobs pay about the equivalent of $50,000/year).  What gives?  Yes, those massive state oil revenues play a large role, but they don’t tell the whole story.

Norway owes much of its success to its fervent national pride (which could just as easily be a liability, but so far, so good) and a strong sense of responsibility toward the common good.  On the world stage, Norway largely goes its own way.  Having gained its full independence only in 1905, Norway has twice voted against joining the European Union.  After 400 years of Danish-Swedish subjugation, Norwegians have little enthusiasm for any further “unions.”

Even Storm Troopers are Norwegian Patriots

Even Storm Troopers are Norwegian Patriots

While other oil-rich European nations blew through their massive surpluses during the boom years, Norway stood mostly alone, saving up one of the world’s largest sovereign wealth funds.  Though oil revenues represent about 20 percent of government revenues, only 4% of that money is allowed to be spent on current needs, while the rest is banked for that rainy day when the oil runs out.  Saving for the future, what a novel idea!

Norwegian Currency

Norwegian Currency

Speaking of banking, another way Norway bucks the international trends and exhibits a concern for societal stability: According to the New York Times, “banks represent just 2 percent of the economy and tight public oversight over their lending practices have kept Norwegian banks from taking on the risk that has brought down” other European counterparts (“Thriving Norway Provides an Economic Lesson”).  Compare this to the US, where business media reported last April that America’s five largest banks held assets equal to 56% of the US economy (“Big Banks: Now Even Too Bigger to Fail“).   Yeah, that’s been working out pretty well.

Norwegians appreciate that they got lucky when oil was discovered offshore in the late 1960s, and they take very seriously the need to manage well this relatively newfound wealth.  Norwegians feel, “If you are given a lot, you have a lot of responsibility” (New York Times).  Reading through some of the highlighted comments on the Times article, certain phrases jumped out at me as being highly representative of Norwegian values: caring about “greater social good through delayed gratification” and the belief that “Everyone deserves to live as concern-free as possible.”  By managing their wealth well now and not binding their economy too tightly to anyone else’s problems, Norwegians have created a system whereby living within their means today helps to ensure security for future generations.

And so far, that’s working out pretty well for them.