[LINK] "Alberta and Norway: Two oil powers, worlds apart"

[rfmcdonald]

Friday in The Globe and Mail, Brian Milner and Jeff Lewis compared the differing strategies of Norway and the Canadian province of Alberta to their oil windfalls. Norway banks it, Alberta spends it. Why? They do a good job contrasting and comparing.

Faced with the steepest decline in oil and gas spending in a decade and a half and the biggest job losses since the global financial meltdown, the centre-right Norwegian government is pledging to tap more of the country’s accumulated resource wealth in an effort to stanch the bleeding.

The sudden decline in its fortunes has put a spotlight on Norway’s unusual handling of its gusher of resource cash over the years, parking 100 per cent of the government’s revenue from royalties and dividends in a fund that is barred from investing a krone in the domestic economy.

It’s a vastly different approach compared with Alberta and other energy producers, which set little aside from their energy windfall and are now facing bleaker fiscal and economic conditions without much of a cushion to soften the blows of tumbling oil prices.

The Alberta Heritage Savings Trust Fund, the province’s rainy-day umbrella, barely has enough capital to deal with a few scattered storms. Norway’s equivalent, which was partly modelled on Alberta’s when it was set up in the early 1990s, could handle a deluge of almost biblical proportions.

Consider the fortune amassed by Norway’s prosperity fund. Norway’s petroleum treasure chest holds assets totalling some seven trillion kroner ($1.1-trillion), making it the world’s largest sovereign wealth fund. It’s a potential shock absorber of a size and scope not available to any other energy producer outside the Arabian Peninsula.