The fuel protests of the past two weeks have been largely about taxes. But if it’s tough for Europeans to accept high fuel taxes, it’s toughest for the Norwegians. Only the Saudis export more oil. Money has been sloshing into Norway since the first of its North Sea wells came on-stream in the 1970s. Thanks to recent OPEC price increases, the state-owned oil company Statoil tripled its profits to a record $598 million in the first half of this year. With oil has come prosperity. Barely 30 years ago Stavanger was a quiet backwater port, reliant on the changing fortunes of its shipping and canning industries; now, the timber-frame buildings of the old town house fashion boutiques and ethnic restaurants. But the oil-fueled affluence is no guide to prices at the pump. “We are selling oil to many, many countries yet we have to pay more for it than they do,” says Rune Liberg, who quit the trucking business last month under pressure from mounting costs. “The government is always promising lower taxes but they just keep going up.” Unless next month’s national budget brings some concession, drivers threaten to match the protest blockades seen across Europe.
Why such rigor? One explanation begins with the prudence that colors all national policy-making. Economic overheating in the 1980s and the shock of declining oil prices in the 1990s made Norway’s leaders leery of the effects of windfall wealth. “If you look at our oil income over a long period, the jury is still out on whether oil will prove a blessing or a curse,” says Gjedrem Svein, governor of the national bank. The Norwegian solution stresses self-denial. Almost all those oil kroner flow into a “rainy day” account, the Petroleum Fund, established in1990. It now holds some $33 billion–plenty to pay the pensions of today’s wage earners once the last well runs dry in 30 years or so.
High taxes are just another form of self-denial. A wealth tax narrows the gap between rich and poor, and steep alcohol taxes take the fun out of Friday night. (Don’t expect much change from $5 for a beer at an Oslo bar.) The hefty petrol tax ensures that motorists pay the full price even though 4.3 million Norwegians scattered over an area larger than Britain depend heavily on cars. Says oil industry analyst and former politician Hans Henrik Ramm: “In the past people haven’t felt it was right to object about the high taxation: using energy was a sin.”
But the old consensus that supported the state’s nannying role is under strain. Approval ratings for the Labour-led coalition of Prime Minister Jens Stoltenberg have plunged amid concerns that the budget can’t cover the costs of a generous welfare system. Patients worry about lengthy waiting lists for hospital operations; parents are concerned by a creaky school system. Stoltenberg, once billed as a Nordic Tony Blair, has struggled to modernize his party but faces an uphill task persuading its old guard to accept plans to raise cash by selling off a stake in Statoil. The government has signaled its readiness to help out the truckers, but support is building for the right-wing Progress Party. Among its proposals: a raid on oil revenues to increase health-care spending and a reduction in fuel taxes.
Talk of higher spending rattles the cautious economists. They point out that any increase would threaten Norway’s enviable economic record. Unemployment and inflation are negligible. Already, labor shortages threaten to push up wages, says Oystein Dorum, chief economist of DnB bank in Oslo. On the other hand, he recognizes political imperatives. “If the slide in the opinion polls continues, this is going to be a very tough time to be Finance minister.” Small wonder that all parties are now talking of adjusting the fuel-tax regime. There’s an election due next year, and self-denial wins few votes.
