[MoreMoschops]

"What about other oil-prosperous small countries such as the Emirates or Kuwait?"

For a long time, when a country became rich through oil, there were two paths. One was a fascist socialism in which the population was bought off with the proceeds, non-jobs flourished and foreigners did all the actual work (many of who were effectively slave labour). This is most of the oil-rich middle-east.

The other model is, horrifyingly, even less admirable. A handful at the top take everything, sell their souls to foreign oil giants, and everyone else is screwed over. This is Nigeria and chums.

Norway is the third option. Norway ploughs the money into a sovereign wealth fund, with long term plans. They've become world experts in getting "difficult" oil out of the wells which will see their services increasingly in demand around the world. Norway is a charming country to live in, despite being cursed with oil.

[arethuza]

One of the leaders of the new Libyan government was interviewed on BBC Radio 4 and he was asked what country he would like Libya to be like in the future - his answer was Norway.

[Note - both countries have populations of about 5 million]

[gizzlon]

"Norway is the third option. Norway ploughs the money into a sovereign wealth fund"

The older I get the more impressed I become with how this was, and is, handled. Especially when you see how it could have tourned out ..

[justincormack]

And almost did. Until the late 1980s/early 1990s they just squandered the money like the UK did, running large deficits. But they turned things around then.

[sliverstorm]

Can we hire their government to come over here and steer for a little bit?

[cynest]

As soon as we find comparable oil wealth.

[arethuza]

The UK had plenty of income from the North Sea - the difference being we squandered it and the Norwegians treated it as a long term investment:

http://www.telegraph.co.uk/finance/comment/edmundconway/6505...

[ticks]

There's a fourth option, where the country gorges on the short term flood of cash and easy access to oil and gas, which keeps taxes artificially low. The UK enjoyed the same benefits as Norway but went down this route instead - to a point where natural gas is now being shipped from South America to boost the reducing North Sea output.

[MoreMoschops]

To my mind, there's a difference in the relative size of the oil windfall. The UK has over ten times the population of Norway, so in effect the sudden cash income just doesn't compare to the Norwegian experience. The UK enjoyed similar benefits in absolute terms, but per capita it was much, much less. For the UK, it wasn't a game-changer, but for Norway etc, it was. The UK did not become "rich through oil", but Norway did.

[ticks]

The UK was in a bit of a crisis in the late 70s, early 80s - at risk of becoming bankrupt from the reliance on unreliable coal and imported oil.

That's the main reason why I think the North Sea reserves were gorged. A major shift was made to gas generated electricity (as well as being plumbed directly into homes) and a long term hope that nuclear was the future, which hasn't happened yet.

It essentially got the country through the 80s and 90s, and allowed a difficult transition towards services in time for globalisation.

[arethuza]

That transition to financial services worked out well!

[ticks]

Indeed. Though manufacturing for anything other than the high end had little chance of succeeding due to East Asia and Eastern Europe. It will eventually return once oil prices reach a certain level.

[WildUtah]

Alaska is model one. Texas is model two.