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Global Impact of Transportation

Global Impact of Transportation

We all take transportation for granted whether it’s driving our car to work; flying to a favourite holiday destination; or waiting for that new television to be delivered from the other side of the world by cargo ship.

While transportation offers us many benefits, these come at a price. Truck Locator has compiled just a few of the statistics which show the substantial impact transportation has on a global scale.

Global Warming

Climate change is high on the agenda of many governments and scientists as it is becoming ever clearer that our planet is warming. This has led to more extremes of weather including fiercer storms and larger areas of drought. A clear sign of global warming is the gradual disappearance of the polar ice caps, which according to NASA are melting at a rate of 9% per year. In 2002 a huge part of the Larsen B ice shelf, which forms part of Antarctica, collapsed. This means that since the mid-1990s the area has lost over 40% of its mass.

Transportation, undoubtedly, is making a contribution to the greenhouse gases which are causing global warming. Gases such as methane, carbon and nitrous oxide build up and prevent heat from escaping the atmosphere and thus we see an increase in the temperature of the planet. 13% of global carbon dioxide comes from cars, trucks, aeroplanes and shipping and in the last two decades emissions from transportation has increased by 45%.

Air Pollution

Transportation contributes to air pollution and with millions of deaths and hundreds of healthy years lost to its devastating effects, air quality is something which needs to be addressed. Governments around the world have made in-roads by introducing legislation to reduce vehicle emissions. However, the recent emissions scandal demonstrates that we may not have made as much progress forward as we had hoped.


Transportation also has a cost in terms of human life. There are over 1.2 million road deaths globally every year and it’s not just drivers who are involved. 27% of fatalities are pedestrians and 5% are cyclists. While safety improvements are constantly being implemented, for both vehicle and other road users, it is not possible to protect people entirely, especially when human error is incorporated. A new evolution of car, driven by computer, is on its way and maybe these will go some way towards improving safety. It will certainly eradicate those mistakes made by drivers such as speeding; driving too close to the vehicle in front; or being distracted by a call or texting.

Is there a Solution?

None of us wants to revert to a world where travel is limited or only available to the select few. Therefore we all need to play our own part in making transport more eco-friendly. The first step is to minimise unnecessary travel and to make as many journeys as possible by foot, bicycle or public transport.

Oil reserves are diminishing and thus many of us will need to consider new types of vehicle. Hybrid models and electric cars are increasing in popularity and as the network of recharging points is expanded across many countries, driving an electric vehicle will become more viable.

Industry also needs to play a part and there is research being carried out on new fuels that potentially have value for road vehicles, aeroplanes and shipping. These changes cannot come quickly enough as we are still unsure whether there is time to reverse the damage we have wreaked on the planet in terms of global warming. Only time will tell, but in the meantime it is important we all make changes, however small, towards using more green modes of transport.

global impact of transportation trucklocator UK










The resource is a data visualisation infographic filled with data from this site you already link to but put together in a very clever way that highlights just how much is affecting the global air quality.
This is the link to the graphic:

– See more at:



5 Responses to “Global Impact of Transportation”

  1. Tom Pendergast says:

    If oil and gas reserves are diminishing, why does their production (and the estimates) keep going up? Today we have a glut.

    IHS CERAWeek: US ‘revolutionizing’ growing global LNG market

    HOUSTON, Feb. 26

    By Matt Zborowski

    A decade after forecasts of increased construction of LNG import terminals in the US, the nation’s first LNG export cargo departed Sabine Pass, La., this week for Brazil. The event overlapped with a Feb. 24 gathering of leaders from the natural gas sphere at IHS CERAWeek in Houston.

    “There is no doubt that LNG from the US is revolutionizing the market in terms of flexibility,” said Meg Gentle, president of marketing of Cheniere Energy Inc., during a panel discussion on global gas markets. Her firm liquefied, loaded, and shipped that first cargo on the Asia Vision LNG carrier.

    The continued evolution of LNG in the US will result in the nation emerging as one of the three largest suppliers on the global market by 2020, accounting for 8 bcfd in total production from the five facilities currently under construction, Gentle said. “That will represent about 20% of the LNG market at that time.”

    She explained that gas is abundant and cheap to produce in the US, and construction costs for liquefaction are among the world’s least expensive. “Therefore natural gas from the US can match the market price for gas in every single region of the world.”

    Over the next 5 years, the global market will increase by 50%, she said, noting that 16 new liquefaction plants will be brought into production over the next 24 months alone.

    “By 2030, we will need to add over 200 million tonnes of new liquefaction capacity that needs to begin construction by 2025,” stated Gentle. “If the trains are each about 5 million tonnes[/year] of capacity, we need 42 new trains to reach final investment decision in the next 5 years.”

    Mentioning that the International Energy Agency projects world gas demand to double by 2040, Josh Frydenberg, Australia’s minister for resources, energy, and Northern Australia, said during a separate panel discussion of energy ministers that his country also has positioned itself to capitalize on that demand by building up its LNG sector.

    “Over the next 5 years Australia will triple its LNG production,” reflecting “some $200 billion in investment” in the industry, he said, adding the country “will overtake Qatar by 2020 as the world’s largest exporter of LNG.”

    Diversifying gas markets

    Expected as a primary target of supply from the US and Australia is Asia, and particularly Japan, where a newly formed joint venture of Tokyo Electric Power Co. Inc. and Chubu Electric Power Co. Inc. hopes to become one of the world’s largest LNG buyers.

    Yuji Kakimi, president of JERA, said increased supply from the US will provide more liquidity to the Asian market. “The increased liquidity will also result in more transparency in the pricing mechanism.” Demand is growing within Japan for wider use of price indices, he said.

    “We have to see the development of gas indices in Asia,” Gentle added, “to provide the greater liquidity that goes with a flexible gas market.” She noted that there are hundreds of price points in the US in addition to Henry Hub, which happens to be the best-known.

    Alexander Medvedev, deputy chairman of the management committee of OAO Gazprom, said that while the Asian market is currently slowing down because of China, other nations on the continent such as India and Pakistan can fulfill demand.

    Gentle stated the Middle East “is expected to be a 20-30 million-tonne[/year] market in the next few years from nothing last year.”
    In Europe, gas costs almost three times that of the US, noted Iain Conn, Centrica PLC chief executive officer. “Europe is going to benefit from gas-on-gas competition,” he said. “We’ve got Russian gas competing with Norwegian gas competing with LNG competing with indigenous gas.”

    With the rise of Atlantic basin LNG, Conn sees Europe as the marginal price setter in the near term with demand not increasing as expected in Asia. “This interregional movement of gas is here to stay,” Conn said, “with interconnected gas pricing” like that of crude oil.
    Yuval Steinitz, Israel’s minister of national infrastructure, energy, and water resources, said his country, where the giant Tamar and Leviathan offshore gas fields provide an abundance of local supply (OGJ Online, Feb. 25, 2016), is looking to export through pipelines to Egypt, Turkey, and Greece via Cyprus.

    As an added benefit, abundant gas resources and mutual economic interests could promote stability in the Eastern Mediterranean region, Steinitz stated.

  2. Tom Pendergast says:

    Fraud: To great fanfare and self-congratulation, the European Union signed on to the Paris climate treaty in December. But it won’t be able to keep its promise. Yes, the entire enterprise is a sham.

    The British Guardian reported this week that the “EU is set to emit 2 billion tons more CO2 than it promised at the Paris climate talks, threatening an agreement to cap global warming at 2C.” Unsurprisingly, “lawmakers say that the shortfall could spur criticism from other countries that signed up to the Paris agreement, which aims for net zero emissions later this century.”

    As noted by The American Interest, “the EU was perhaps the most vociferous in its attempt to try and hammer out an international climate treaty.” But as it turns out, it has nothing — its leaders are just another bunch of climate hypocrites who are convinced that if they can act as if they are defending the climate, others will believe in their moral superiority.

    Neither the Paris talks nor any other United Nations global warming conference is actually intended to save the planet from devastating climate change. Those behind the climate scare know that their goals are unreachable and are aware that not only have the dire predictions failed to transpire, the reality is that it hasn’t warmed in almost two decades.

    But the climate meetings and the yowling about carbon dioxide emissions continue. Why?

    Simply put, the global warming alarmist community wants to reorganize the world economy by weakening developed nations that became economically strong through primarily capitalist economic systems. The benefits these nations have worked to accrue are to be handed to nations that have not earned them. Zimbabwe tyrant Robert Mugabe has rushed to the front of the line, demanding that the U.N. send him $1.5 billion a year to feed his people, because, he says, they have grown hungry due to global warming. That’s the shakedown in progress.

    The U.N.’s top global warming official, Christiana Figueres, executive secretary of U.N.’s Framework Convention on Climate Change, has even admitted this. A year ago, she said “this is the first time in the history of mankind that we are setting ourselves the task of intentionally, within a defined period of time, to change the economic development model that has been reigning for at least 150 years, since the Industrial Revolution.”

    It’s difficult to characterize how destructive it would be to alter the economic development model that has brought so much prosperity since the beginning of the Industrial Revolution. We truly are a carbon-based economy. After floating along sideways for centuries, global per capita GDP sharply exploded upward at the time of the invention of the steam engine in 1775. Economist Deirdre McCloskey points out that the gains were so great that there was rather suddenly “eight and half times more actual food and clothing and housing and education and travel and books for the average human being — even though there were six times more of them.”

    The Industrial Revolution was the vehicle capitalism could use to generate the prosperity we still see today. It allowed for booming increases in productivity, an enormous expansion of trade and unprecedented freedom of travel, a critical piece of a market economy.

    If the warming alarmists were to get the CO2 cuts they say they are necessary, the world wouldn’t suddenly fall into pre-1775 conditions. But the capitalist economic engines that have advanced global wealth and health would be slowed significantly, with the ultimate goal being their eventual destruction and the enrichment of poor, non-capitalist nations (which are poor because they’re non-capitalist).

    The wealth gap, though, will remain and we’ll all be worse off. That’s what efforts to create equality always do.

  3. Tom Pendergast says:


    I’d like to see any Global Scholar student from Granville or any Global Commerce major from Denison absorb, reflect and expound upon this writer’s remarks. Frankly, I have very low expectations.

    One remark the author makes that I absolutely love is that the warmer the globe becomes, the less need there is for energy!

    He also cites the growing diversity of Nigeria’s economy. If it’s anything like Total’s experience in the Congo (they also operate in Nigeria), with the fabrication of the jacket for the platform that carries the topsides including the Siemens Energy generator from Mount Vernon completely carried out in the Congo . . . well, that is quite simply most encouraging. And it goes to show how important it is to work together, across cultures, to achieve a better world.

    I wonder to what extent people like Ryan Bernath and Jeff Brown really get this. I am quite sure that people like Karen Wright and many of the people on her shop floors get it . . . same with Dick Kincaid and Sugimoto san.


    The Crude State of Affairs

    “The Stone Age did not end for lack of stone, and the oil age will end long before the world runs out of oil” – Sheikh Ahmed Zaki Yamani, former Oil Minister of Saudi Arabia Remember him?

    By Taiwo Oyedele

    Oil price fell to about USD 26 per barrel some days ago, the lowest in almost 13 years. Gas has suffered a similar fate, trading around USD 1.97 per million British thermal units (MMBtu), a decline of almost 70% from its 2014 peak. The depressed price is largely blamed on oversupply due to shale oil and gas, new entrants, recent Iranian deal, and OPEC’s refusal to cut output in order to keep market share.

    He says ‘refusal to cut output’ but I think that the fact is they don’t have any choice; they’re between a rock and a hard place. tp

    As supply continues to rise, demand seems to be on the decline due to slowing economic growth in many parts of the world. Two of the BRIC countries, Brazil and Russia are in recession, while growth has slowed considerably in China with only India living up to expectation. Growth in the EU is almost flat while the modest growth in the US is helping but not enough.

    Crude Reality

    With total global oil supply at over 97 million barrels per day compared to global demand of about 96 million, price is not likely to recover significantly in the near to medium term as oil producing countries continue to fight for market share. Freezing output will also not solve the problem unless demand increases to match or exceed supply. But whether demand will rise in the long run should even be a bigger concern than the short term oversupply. And what if the world someday no longer needs oil? So here are some reasons why the future of oil may be very different from its past:

    1) Climate change – As the world continues to produce more fossil fuel particularly crude oil and gas, with more discoveries and unexploited reserves, the increase in supply is set to intensify. On the other hand the awareness about climate change means movement away from oil. We have seen the world united against climate change which culminated in the recent Paris Accord. In addition, many countries are taking steps in this direction from Clean Power Act in America to various anti-emission laws in Australia, the EU, Asia and Africa. Also, the general rise in global temperature means relatively less energy is needed. In my view, Nigeria did not move away from oil, rather it was oil that moved away from us. The former would have meant that we have a diversified economy that is capable of generating sufficient non-oil revenue and foreign exchange to plug the hole created by dwindling oil prices.

    2) Renewable energy – At the recently concluded World Economic Forum in Davos, Denmark was celebrated for generating 40% of its energy need from wind. We have seen solar roads designed to generate power in France; energy to power homes from riding bicycles in Amsterdam; while Morocco is building the largest solar power plant the world has ever seen here in Africa among others.

    3) Technology – Technology was a key factor in making shale oil and gas commercially viable. The United States is now self-sufficient and even considering exporting oil. Technology advancement like electric cars, solar powered airplanes and similar inventions will gradually but certainly reduce future demand for oil.

    4) Energy efficiency – There is energy efficiency being gained in many areas. From energy saving bulbs, cars, generators to Xtreme Fuel Treatment products, energy consumption including those from oil will decrease.

    This next point is quite interesting. I’m glad to learn of this point of view. tp

    5) Population and global economic growth – A counter argument is that world’s population is growing which means more energy will be needed. However, growth in population is more in countries that consume very little energy per capita while growth is mostly stagnant or even negative in heavy energy consuming nations. Some analysts believe that low oil prices will actually trigger more demand letting loose consumption that was previously suppressed. [i.e. “the cure for low prices, is low prices” argument. t.p.] While this may be true, it is definitely not a safe bet given that overall global economic growth is weak and may remain so for the near future.

    The Crude Strategy
    The challenges we are facing now present a unique opportunity for oil producing countries and energy companies to rethink their strategies. It requires thinking about the unthinkable such as if crude oil is no longer required as the main source of energy to power the global economy. It is conceivable that oil may become less important and perhaps its byproducts will become mainstream. The knock-on effect would be a disruption not only to the oil industry but also many sectors that depend on or provide services to the sector – but like the end of the Stone Age, new sectors and opportunities will emerge. While this scenario will take some decades to play out, it is increasingly becoming a question of when rather than if.

    Low oil prices may not only become the new normal but may become desirable as the lesser of two evils for producing countries. Low or no margins would require oil producers to focus even more on cost cutting and overall efficiency. This could mean that oil companies may be less able to afford attractive compensations and perhaps even need less people but more machines.

    Nigeria’s GDP shows that the economy is diversified but many of the sectors are largely informal, uncompetitive and not very productive to earn tax revenues for government and generate foreign exchange receipts. Tourism for instance can create millions of jobs and generate billions of dollars for the economy but requires good infrastructure, better perception about the country, and addressing insecurity to thrive.

    On the fiscal side, the failure to pass the Petroleum Industry Bill when the price of oil was high and oil companies were willing and able to invest was a missed opportunity. The continued price regulation of petrol even when the market price is naturally below the pump price will even be a bigger opportunity missed for the sector to be fully deregulated in order to attract private sector investments. There is also an opportunity to now charge tax on petroleum products based on existing laws. This can help government generate hundreds of billion naira without necessarily leading to higher prices at the pump especially for petrol. After all is said and done, what would matter most will not be the current challenges we faced but rather how we reacted and planned ahead to survive the short term pain for long term benefits. ____________________________________________________________________ Taiwo Oyedele is the Head of Tax and Regulatory Services at PwC Nigeria and Tax Leader for PwC West Africa. He is an author and public speaker on tax, business and economic matters.

  4. Tom Pendergast says:

    Oil, clean energy & Econ. 101: the Norway case

    How Can Tiny Norway Afford to Buy So Many Teslas? Full Transcript
    October 16, 2014 @ 10:00am
    by Freakonomics
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    This is a transcript of the Freakonomics Radio podcast “How Can Tiny Norway Afford to Buy So Many Teslas?”

    [MUSIC: “Ja, vi elsker dette landet” (Norwegian National Anthem)]

    Stephen J. DUBNER: As you likely know, the American automobile company Tesla makes some of the most desirable–and expensive–electric cars in the world. The company is currently valued at roughly $31 billion. Compare that to the $55 billion market cap of the Ford Motor Company.Tesla, however, last year sold fewer than 25,000 cars while Ford sells more than 6 million vehicles a year, or roughly 240 vehicles for every single Tesla. Tesla currently has just one vehicle in production, the Model S luxury sedan. In the U.S. the starting price is a bit more than $70,000.Americans buy more Model S’s than anyone, which isn’t very surprising. But which country do you think has routinely been coming in second?


    ANNOUNCER: From WNYC: This is FREAKONOMICS RADIO, the podcast that explores the hidden side of everything. Here’s your host, Stephen Dubner.

    [MUSIC: Gjesdalringen, “Jämtpolska” (from Traditional Folk Music From Norway)]

    DUBNER: Okay, here’s the question of the day. Tesla Motors opened its first stores, in California, in 2008.Today, the U.S. is still the largest market for this tiny, beloved automaker. China is poised to become the second-largest – it may already be and we just don’t know it yet. But until the China takeover, what country do you think ranked No. 2 on the list of Tesla devotees?

    MEDIA CLIP (ENGLISH TRANSLATION OF NORWEGIAN AUDIO): We are the first in line to test the Tesla Model S on a long-range trip in typical Norwegian winter temperatures.

    DUBNER: Oh, sorry – you don’t speak Norwegian, do you? But yes, Tesla’s second-biggest market in the world, at least until recently, was tiny Norway;population, 5 million.

    MEDIA CLIP: This is Planet Earth and this, this is Norway. Many people think that Norway is the capital of Sweden. So if you think so right now, you are wrong.

    DUBNER: Now, remember that electric vehicles still make up a tiny share of overall vehicle sales, and Tesla doesn’t sell that many cars period, so the Norwegian numbers aren’t gigantic – an average of 436 cars per month this year. In one month, however – March – there were nearly 1,500 Teslas sold in Norway, the most cars of any sort ever sold in a one-month period in Norway.Not just electric cars; cars, period. One of every 10 new cars registered that month in Norway was a Tesla Model S. Which is pretty amazing for a luxury sedan whose base price in Norway is more than $100,000!

    Sindre LEGANGER: Have you been considering buying a Tesla or an electric car for yourself?

    VOICE: (laughs). I don’t think I have the money for that. But, my father think of buying an electrical car.

    LEGANGER: How many people do you know have an electric car?

    VOICE: Two, both Teslas.

    VOICE: I would say maybe 20 to 30 people

    VOICE: One, I think, but I see a lot on the streets.

    VOICE: About maybe 10-20 people that I know.

    VOICE: Too many, I know personally two or three very well.

    LEGANGER: Do you have one yourself?

    VOICE: Not at all. I work for an American oil company.

    VOICE: I’m very jealous of my neighbor that has a Tesla, so I might need to buy one myself (laughs).

    VOICE: The last two and a half months, I’ve had my own, and I love it.

    [MUSIC: Johnny Sangster, “Thirsty Vines”]

    DUBNER: So what’s behind the Tesla boom in Norway? Well, for starters, Norway is fond of electric vehicles generally. It has a higher share of them than any other country in the world; it’s easily the biggest European market for electric vehicles. This has to do with both demand and supply. On the demand side: Norwegians are affluent and see themselves as proudly green; the country plans to reduce its greenhouse emissions by 30 percent by 2020. And, on the supply side: Norway gets virtually all of its electricity from hydropower, which is both cheap and clean. But might there be some other reason why so many electric vehicles, and Teslas in particular, are being bought in Norway?

    VOICE: Because right now you are free to drive in the bus lane, if you own an electric car. And I think that’s a major advantage.

    VOICE: It takes 10 minutes to get to the office instead of one hour if you have a Tesla, so.

    VOICE: Yeah, free public parking. You don’t have to pay at the toll roads.

    VOICE: Again, the incentives are the big point here.

    DUBNER: Ah, the incentives. They are, shall we say, substantial, as Tesla makes clear on its website: if you buy one, the annual registration fee is waived, as are tolls, and you get access to less-congested traffic lanes. If you drive for a living in Norway, an electric car gets you an income-tax deduction. And – here’s the biggest difference – the Norwegian government makes electric cars, including the Tesla, exempt from some very, very hefty sales taxes. So when you add all this up…

    Martin SKANCKE: The difference between the price of a Tesla and the price of a similar gasoline-driven car is huge in Norway compared to other countries. And so in relative terms, the Tesla is a lot cheaper than other cars.

    [MUSIC: Euforquestra, “Intro to Ochun” (from Let Us In)]

    DUBNER: Okay, so the Norwegian government is massively subsidizing electric vehicles, even the very expensive ones. That’s nice, especially if want to buy a Tesla yourself.

    VOICE: They want to have a good electric car, and the Tesla is a very nice car you know?

    VOICE: They are subsidized and they look good, the Tesla looks good.

    DUBNER: Now, keep in mind that these subsidies may be phased out, and soon. Jay Cole, the editor of the website Inside EVs, which covers the electric-vehicle industry, tells us that once Norway hits a ceiling of 50,000 electric vehicles, the tax breaks may be allowed to expire – which gives even more incentive to get a Tesla today. Now, you may ask yourself: where does the government of such a tiny country get all the money to subsidize a luxury electric car to the point that it is the best-selling model in the country?

    VOICE: It’s massive hypocrisy because we, we are one of the largest distributors of oil and gas in the world.

    VOICE: For sure, it’s really a contradiction.

    VOICE: Yeah, I think it’s kind of hypocritical because we say that we care about the environment and want to do something about it, but in fact we are one of the worst.

    DUBNER: That’s right: Norway, one of the greenest countries in the world, can afford to be so green partly because it is so rich in fossil fuels: it is the biggest oil producer in Western Europe and the third-largest exporter of natural gas in the world.

    VOICE: Environmental politics is full of double morale. That’s just how it is, right? We are doing that with the right hand, and we’re doing that with the left hand, so it’s a pity.

    VOICE: Yeah, I think it’s uhh, what is the word again? Cara…(Says Norwegian words)

    LEGANGER: Paradox?

    VOICE: Yes, it’s a paradox.

    DUBNER: What she said – a paradox. Pumping all that oil and gas that gets burned somewhere else, and which generates the money to let Norway be super-green. Is that super-green? Or is it more like … carbon laundering?

    Martin SKANCKE: Okay. So my name is Martin Skancke.

    DUBNER: We went to this gentleman to find out.

    SKANCKE: I work as an independent consultant now, specializing in advising countries with natural resources on how to manage those resources. I’ve been doing that for the last three years. Prior to that I worked for many years at the Norwegian Ministry of Finance.

    DUBNER: Years ago, Skancke helped set up Norway’s sovereign wealth fund. If you’re not familiar with that phrase – well, it’s essentially just an investment fund that manages government money. Some of the biggest sovereign wealth funds in the world belong to Saudi Arabia, China, the United Arab Emirates, and Kuwait.So you get the picture. Now, as I said, those are some of the biggest sovereign wealth funds in the world – but none of them are No. 1. Guess who’s No. 1?

    SKANCKE: Yeah, so in 1996 I was head of what’s called the Section for Monetary Policy and Public Finances in the Ministry of Finance. And we were sort of given the task of setting up this fund, which no one at the time, we didn’t really expect it to be…We thought it could be big, potentially, but, you know, we tend to be relatively conservative I guess in a sense.

    DUBNER: Tell us a bit about Norway. So I paid my first visit to Norway a couple months ago and was very much taken with…It was fascinating on many, many levels and enjoyable on many levels. I have to admit though, for someone that I thought I knew at least a little about most places, most of what I learned about Norway, I hadn’t known at all. So I would love it if you could just give us a very brief summary of the country for those of us who know even less than I knew coming in. Just some summary statistics perhaps having to do with the size, the economy, how the government works and so on. Let’s start there.

    SKANCKE: Yeah. So Norway is a country in Scandinavia, northern Europe. It achieved its independence a little over 100 years ago, 1905, after being first in a union with Sweden for 100 years and then ruled by Denmark for 400 years before that. So in a sense it’s a relatively young country. About 5 million people now. And traditionally, of course, fisheries was a big export sector and also because of access to cheap hydroelectric energy, we had a large metal sector, aluminum sector for instance. And then about 45 years ago, on Christmas Eve, 1969, oil was found on the North Sea outside the coast of Norway. And the oil revenues started flowing in to the government in the 1970s. So we’ve had oil revenues for about 40 years.

    MEDIA CLIP: Since ancient time, Norway has survived on fish, potatoes, rocks, and plundering. And then in the 1960s, we invented the oil. We gave up rocks and plundering, but we still like fish and potatoes. The invention of oil has in many ways laid the foundation of today’s society, where we are born with skis on our feet.

    DUBNER: You are the only folks in the neighborhood who have oil, which is just a matter of geographical fortune… Tell us a little bit about the circumstances. Who made the discovery, how did it happen?

    SKANCKE: This particular discovery was actually made my Phillips Petroleum out of Bartlesville, Oklahoma….And that field was developed into what is called the Ekofisk field, one of the largest, still one of the largest, most productive fields in Norway, even after 40 years.

    DUBNER: Okay, and what share of Norwegian oil is undersea?

    SKANCKE: Oh, 100 percent.Everything is offshore.

    DUBNER: Okay, so you had this previously absolutely invisible and unknown wealth just sitting out there. And then it was, now no longer invisible and no longer unknown. And what happened then? 1969 you said was the discovery — how much money started to come in and how did the government handle it initially?

    SKANCKE: The net cash flow to government was really moderate for the first few years in the 1970s. But what happened was, and this is the case in many oil-producing countries, is that sort of expectations of future revenues sort of outran the actual revenues…And I think that had an effect in two ways …So because we have this money, I think the government felt freer to spend money to increase demand. And I think less attention at the time was given to structural changes. In a sense, we spent money on avoiding change and avoiding a restructuring of, for instance, state-owned industries and inefficient industries that we had at the time. That was one aspect of it. And another aspect was the effect on expectations in the private sector, expectations in the companies, the demand for labor and wage growth was very high. Inflation was very high. And that was a side effect of this discovery of oil.

    [MUSIC: Carson Henley, “Ain’t Gonna Dry Your Tears” (from 100 Hours)]

    DUBNER: This “side effect” was not unique to Norway. In fact, it’s commonly called “Dutch Disease.” In the 1960s and 70s, the Dutch economy began to go sideways after the Netherlands discovered natural gas in the North Sea.

    Daron ACEMOGLU: The economy becomes too specialized in the production and the export of the natural resources, crowding out the other sectors of the economy.

    DUBNER: That’s Daron Acemoglu.

    ACEMOGLU: I’m a professor of economics at M.I.T… I do political economy, labor economics and economic growth.

    DUBNER: Acemoglu is also the co-author, with the Harvard political scientist James Robinson, of a book called “Why Nations Fail.” In it, they argue that the type and quality of the political institutions in a country greatly influence its economic success. One example might be how a government deals with Dutch Disease. If you suddenly have a lot of oil or gas and start selling it abroad for lots of foreign currency, the domestic currency can rise sharply.

    ACEMOGLU: What happens is that when you have this sharp appreciation of the domestic currency, that makes a lot of the merchandise that an economy usually sells abroad non-competitive. And so what that does is that it sort of forces the economy to move away from manufacturing. And there are two sorts of reasons why people generally think that manufacturing-type jobs are…socially valuable for an economy. One is that they are generally thought to be the higher-paying jobs. And then the second that is more sort of a dynamic version of that, that many economists believe that…there is greater room for learning by doing, technological progress, innovation and other sorts of economic dynamism in the manufacturing sector.

    DUBNER: Norway, when it began selling all that new oil and gas, got a pretty bad case of Dutch Disease. Martin Skancke again:

    SKANCKE: Through the 1970s we had increasing problems with competitiveness because of high wage growth and high inflation. We had still large investments on the continental shelf, and… the country was borrowing a lot of money, because we had large current account deficits, one of the largest current account deficits in any OECD country at the time. And we were very close to having to ask for an I.M.F. stabilization program at that time. And then came in 1979, 1980 the revolution in Iran and oil prices quadrupled from $10 a barrel to $40 per barrel. And suddenly things seemed very rosy. People got very optimistic again. And in the 1980s it was a period of very high consumption growth, high credit growth, very accommodating policy, and when oil prices fell in 1986, the economy to some extent collapsed because the economy was not resilient enough to handle an oil price fall of that magnitude. This happened in 1986. So on the back of that, we got a banking crisis because people didn’t have money to repay their loans. And house prices fell. And so unemployment increased. We had to cut back on government spending because of the fall in oil prices. So I think, and at that time in 1990 we were still in the middle of a crisis, but there was thinking among I think some very foresighted technocrats, really civil servants in the Ministry of Finance, and some politicians, who felt that if we ever had sort of a third chance to do things right, we would do better.

    [MUSIC: Louis Thorne, “My Cigano”]

    DUBNER: Coming up on Freakonomics Radio: Norway gets its third chance…

    SKANCKE: I would think that at latest by the end of this decade, the fund would be $1 trillion.

    DUBNER: And now other countries look to Norway to figure out all the exciting things to do with their sovereign wealth:

    SKANCKE: But I want to talk about audits and reporting and the boring stuff…

    DUBNER: And one more thing, that is not boring: you can subscribe to Freakonomics Radio at iTunes and on other podcast apps. It’s free, it’s easy, and I can promise you it won’t give you Dutch Disease.


    ANNOUNCER: From WNYC: This is FREAKONOMICS RADIO. Here’s your host, Stephen Dubner.

    [MUSIC: Pearl Django, “Dragonfly” (from Swing 48)]

    DUBNER: In 1969, Norway discovered what turned out to be a massive amount of oil and gas. This was not entirely good for the Norwegian economy – there was a lot of instability. But after a couple of decades, they came up with a solution. Norway created a sovereign-wealth fund:

    SKANCKE: So I think it was seen primarily as a tool to stabilize the economy and to introduce sort of a buffer between the very volatile oil revenues and the non-oil economy.

    DUBNER: The fund was set up then in 1996, correct?

    SKANCKE: Well, the formal structure was set up in 1990… in the middle of the crisis. Of course then we didn’t have any money to put in the fund…And the first allocations to the fund, the first money was set aside in the fund in 1996.

    DUBNER: The fund in 1996 had about $200 million in it, is that right?

    SKANCKE: Yeah, the first allocation to the fund was about $200 million, yes.

    DUBNER: Okay, and now here we are talking, just a little bit more than 18 years later, how much money is in the fund or funds today?

    SKANCKE: About $850 billion.

    DUBNER: That’s a nice number, isn’t it?

    SKANCKE: I mean, it’s a lot of money and you have to remember that it’s a population of 5 million people.

    DUBNER: Which works out to…you could give them all about $160,000 each, I guess, if you wanted to liquidate. Yeah?

    SKANCKE: Yeah.

    DUBNER: And your projected, projections being what they are in this realm, but you’re projected to hit $1 trillion as the value of the sovereign wealth fund in six or seven years, something like that.

    SKANCKE: Yeah, or maybe even sooner, depending on oil prices and returns and markets. But yeah, I would think that at latest by the end of this decade, the fund would be $1 trillion.

    DUBNER: For a country of 5 million, let’s face it, you’re loaded. You’re loaded, yeah?

    SKANCKE: Yes. But…we have an unfunded pension system, a pay-as-you-go pension system…which means that the government actually has a lot of unfunded liabilities as well… But when the fund was established and…actually during the last decade in particular when oil revenues have been very high, this became also a tool for transfer of financial wealth to future generations. And so that aspect of it has become much more important as the fund has grown in size.

    [MUSIC: KP Devlin, “Blue Marlin Mourning” (from The Occidental Taurus)]

    DUBNER: Like a lot of western countries, Norway has a graying population.So it looks to its massive sovereign-wealth fund as a kind of national 401(k). But, Norway being Norway, it has an unusual investment philosophy.

    SKANCKE: Norwegian citizens are the ultimate owners of the fund and we shouldn’t be making money in a way that they are not comfortable with. And so we have said that some of the worst forms of ethical breaches are things that we will not want to invest in.

    DUBNER: So can you tell me just a little bit about the kinds of industries, the kinds of companies, the kinds of behaviors that you don’t invest in?

    SKANCKE: Yeah, so there are two different groups in a sense. One group are those companies that are excluded because of what they produce. And the other are those companies that are excluded because of how they produce what they produce. So the product-based exclusions are some forms of weapons, like nuclear weapons, like cluster munitions, chemical weapons. And then we have tobacco. Those are sort of excluded.

    DUBNER: So that nearly $1 trillion, none of it is in tobacco products?

    SKANCKE: No, none of it is tobacco.

    DUBNER: Alcohol okay?

    SKANCKE: Alcohol is okay.

    DUBNER: Marijuana?

    SKANCKE: I don’t know that there are any listed companies that produce marijuana, so I’m sure that would come up if that were the case.

    DUBNER: Alright, so knowing Norway as you…let’s say that the marijuana economy begins to really take off, which it is starting to do, and there will be listed companies that deal with marijuana, do you think that’s something that the fund, that your fund, would be okay with?

    SKANCKE: My guess would be no.For the same reasons that tobacco is excluded.

    [MUSIC: The Civil Tones, “Trepidation” (from Rotisserie Twist)]

    DUBNER: Among the other stocks you will not find in Norway’s sovereign-wealth fund: Walmart, because of its, quote, “serious/systematic violations of human rights and labour rights.” The fund has barred some Israeli companies that did construction in the West Bank or East Jerusalem.And there is a movement right now to divest in fossil-fuel companies.

    SKANCKE: This is an issue that we’re looking into. And I’m heading a commission, an expert group that’s set up now to look into the issue of fossil-fuel investments for the fund.

    DUBNER: Let me just ask you this: I’m curious how you reconcile the fact that your country primarily uses oil wealth to grow its sovereign wealth fund for future generations and so on, but part of that strategy is to find, you know, environmentally friendly, less-polluting, more renewable, sustainable industry. So on the one hand, that sounds morally praiseworthy that you are going out of you way to supports practices that you morally approve of. On the other hand, you could say that it sounds a little bit like carbon laundering of some kind, right? You take your oil out of the sea, you don’t even use it much of yourself, you export all of it, nearly all of it, and then you turn that into money that you then build wealth with in a more environmentally, morally responsible way. Is that a conflict for you, or is that the reality of the world and you live with it?

    SKANCKE: …It’s true that we have investments in let’s say environmentally friendly technologies. But those are not… subsidies, it’s commercially oriented and it’s within the ordinary investment program of the fund. But the idea behind the fund is really to buy a slice of the entire productive capacity of the countries that we invest in, including oil companies. And these companies also are in the process of transforming themselves into energy companies more generally.

    [MUSIC: D. James Goodwin, “A New Team”]

    DUBNER: The fact that Norway, owner of the world’s largest sovereign-wealth fund, might empty that fund of fossil-fuel stocks, may strike you as ironic, since so much of Norway’s wealth comes from … fossil fuels. The same wealth, you’ll remember, that helps the government subsidize all those Teslas and other electric cars. Norway is quite the little bundle of paradoxes. Consider this one: among the countries with the biggest sovereign-wealth funds, Norway is the only liberal democracy. The rest are – well, quite the opposite of liberal democracies, and most of them also got rich from oil. This makes Norway an even bigger paradox.

    ACEMOGLU: Economies that have abundant natural resources also have very easy rents that can be captured by groups that become politically powerful.

    DUBNER: That again is Daron Acemoglu, co-author of “Why Nations Fail.”

    ACEMOGLU: So the image that you might want to have here in your head is if you were a politically powerful group, a dictator, or a warlord, would it be easier for you to milk the high-skilled manufacturing in some city in Germany or the oil fields of Saudi Arabia?

    DUBNER: In Acemoglu’s view, an abundance of natural resources, which may seem like a blessing, often turns out to be a blessing for a select few and, for the rest of a country’s citizens, a curse. It’s called the natural-resource curse.

    ACEMOGLU: What the abundance of natural resources does is that it incentivizes lots of groups to become much more conflictual in order to take control of state institutions, be able to be become politically powerful, or blocking actors in order to be able to benefit from these natural resource rents. And the extreme form of this is the sort of civil wars that have ravaged countries like Sierra Leone and Angola where diamonds, another form of natural resource that’s perhaps even easier to mine and exploit than oil, have played a major role, or the huge political instabilities that have erupted in places like Venezuela and Nigeria around the oil economy.

    DUBNER: Martin Skancke, since leaving the Norwegian Ministry of Finance, has advised other countries around the world how to properly manage their natural-resource wealth.

    DUBNER: You are familiar I’m sure with the idea of the natural-resource curse that economists and other social scientists talk about. And it turns out that a lot of countries around the world that do have a lot of oil and mineral reserves tend to be some of the most unstable, undemocratic countries in the world. I understand that you’ve been an advisor to governments including those of Libya, Iraq, Azerbaijan, Venezuela on how to handle the revenues of natural resources, presumably how to set up their own sovereign wealth funds, can you talk about trying to solve that puzzle?

    SKANCKE: Yeah, so it is true that on average, countries that have natural resources tend to do worse than countries that don’t have natural resources. So that is of course a bit paradoxical in the sense that at the outset you would think that natural resources are sort of an extra added bonus that would make you better off. If you go behind those numbers and look a little bit and introduce a second sort of explanatory variable, which is some indicators of quality of institutions, you actually see that it’s more correct I think to think of oil and gas, natural resources, as sort of an amplifier in the sense that those countries that are relatively well-governed and have good institutions and find oil do even better afterwards. But those that are poorly governed to start with, and have weak institutions and find natural resources do even worse. So in many ways this is not a resource curse as much as an institutional curse. And the problem I think is that…if you have weak institutions to start with, they are simply not able to handle the demands of a large natural-resource sector because the pressure on the institutions becomes so large, because the level of conflict in society increases, because there is much more to fight over, and you really need strong institutions to sort of broker between different political factions and have institutions that give you stability even in shifting political climate. And I think that is a real curse in a sense. It’s not the oil in itself.

    DUBNER: So what do you try to accomplish when you consult or advise to a Venezuela, or a Libya, is the idea to say let’s take the money, turn it into a sovereign wealth fund that invests in a responsible way, that will shoot off enough revenue and income to support stronger institutions and let’s do all that while some despots don’t manage to steal the money?

    SKANCKE: Well, Venezuela I haven’t been to for 20 years, so but I’ve done projects in Libya, East Timor, Papua New Guinea, Burma, a lot of countries, and I think the first question is whether it actually makes sense to have a sovereign wealth fund. And I think for many countries if they have a large stock, a large standing debt, it probably makes sense to repay that debt before you start building up a fund. So in very many cases my advice is not to establish a fund at all but rather to use money to repay debt. And then I think the main issue in establishing a fund is really governance and governance structure. And the common theme I think in any country that I am in is that a lot of people want to talk about investment strategy because that’s really exciting. But I want to talk about audits, and reporting, and the boring stuff… And so most of my work is actually directed towards issues of governance rather than investment strategy.

    [MUSIC: Crushed Stars, “Our Interest in Claire” (from Farewell Young Lovers)]

    DUBNER: Skancke is the first to recognize that Norway has some built-in advantages that other countries don’t.

    SKANCKE: Norway is a relatively homogeneous country with a very sort of low level of conflict. And that has of course made management of oil revenues a lot easier than it is in many of the developing countries that I work with primarily now.

    DUBNER: That said, there was no guarantee things would work out as well as they have for Norway. Daron Acemoglu has not spent a lot of time studying Norway and its Scandinavian neighbors. His book, after all, is called “Why Nations Fail,” not “Why Nations Succeed.” Even so, he knows a success story when he sees one.

    ACEMOGLU: And it’s really an exemplary case of how to best make use of the natural resources for the welfare of the citizens without creating instability.

    DUBNER: I did wonder, however, if Norway’s oil wealth had crowded out other industries. I asked Martin Skancke about this.

    DUBNER: So your next-door neighbor, Sweden, who used to run you, doesn’t have oil, but it does have a lot of big, longstanding, profitable global industries and firms. You know, everything from banking, telecommunications, Ericsson, Volvo, Ikea and so on. All things equal, all else equal, if you could choose, would you rather be Sweden because your dependence on oil, it seems as though Norway has managed it incredibly well on many, many, many dimensions, and yet it’s a dependence on a resource that is complicated, let’s say?

    SKANCKE: I was born in Sweden, but I’m glad I live in Norway. So…no, you know, if you look at income levels now, are about 30 percent higher in Norway than in Sweden. And it is true, I mean, the Swedes have been incredibly clever with a lot of their global brands both in manufacturing and service industries. They have a very different tradition, which goes back centuries, a lot more accumulated wealth. They had nobility. Norway was farmers and fishermen and natural resources. And there was never a basis for building up those types of manufacturing industries as the Swedes have. But I think Norway now, as you say, the main challenge for us is resilience in our economy in the face of possible, you know, fall in oil prices or oil revenues. And whether we will be able to live with the high cost level that we have built up over so many years with high oil revenues. But I think the Norwegian economy has proved to be relatively flexible and adaptable. We have very high labor force participation rates. We have a well-educated workforce, so I think that gives a lot of extra resilience to the economy.

    [MUSIC: Clay Ross, “Zydaco Mondo” (from Matuto)]

    DUBNER: A lot of resilience and a lot of electric cars too. The Norwegians I met with on my visit were remarkably candid about the “carbon laundering” idea – candid and, honestly, contorted. They were eager to discuss the discomfort that comes with using oil wealth to put not just a chicken in every pot but a Tesla in every driveway. This eagerness, it strikes me now, is perhaps yet another sign of institutional health. Rather than taking their nearly $1 trillion sovereign wealth fund for granted, as an entitlement, they see it for the paradox it is, and they appreciate it even more.

  5. Tom Pendergast says:

    Algerian citizen action is demonstrating the most effective way to stop shale oil and gas extraction: mortar attacks on gas plants like those of MarkWest in Carroll county.

    ALGIERS, Algeria (AP) — Al-Qaida’s North Africa arm has claimed responsibility for a mortar attack on a gas plant in the Sahara jointly operated by Britain’s BP and Norway’s Statoil, calling it a protest over shale gas extraction.

    No one was injured in the attack Friday and Algerian troops fanned out to hunt the perpetrators. The Defense Ministry said two homemade rocket shells fell near the Krechba production site near In Salah, which is overseen by Algerian state company Sonatrach.

    Al-Qaida in the Islamic Maghreb issued messages saying it targeted the site because the government suppressed protests over environmental fallout from shale gas extraction there. The messages, published Saturday by the SITE extremist monitoring group, also threatened Western companies — specifically those extracting shale gas — and the Algerian government.

    The attack recalled a deadly hostage-taking at another Algerian gas plant in 2013, which left 37 dead. Algeria-based AQIM, which also claimed that attack, drew a direct link between the two.

    AQIM also said it contacted BP and Statoil hours before Friday’s incident to allow them to evacuate staff.

    Statoil spokesman Knut Rostad told The Associated Press on Saturday he would not comment on that claim. “After the attack the companies involved are doing an assessment of what happened and find out if anything needs to be done. I have no further comments,” he said.

    Statoil said its staff was safe and. BP said there were no reports of injuries to its employees.

    While the attacked inflicted no damage, it was a reminder of the vulnerability of even heavily guarded oil and gas fields.

    AQIM also claimed responsibility for an attack Sunday on a beach resort in Ivory Coast that killed at least 18 people.

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