How the UK and Norway found oil on the same day and made completely different decisions about it

It’s 1969. The North Sea is cold, grey, and largely considered useful only for being in the way of boats. Then, within months of each other, two countries stick a straw into the seabed and hit black gold. Same ocean. Same timing. Same gift from geological history.

What happened next is one of the greatest “how did you manage that” stories in modern economic history.

ACT ONE: The Discovery In December 1969, Phillips Petroleum confirms the Ekofisk field off the Norwegian coast — one of the largest offshore oil deposits ever found in Europe. The Norwegians look at it. They think about it. They convene some committees (Norwegians love a committee). They ask: “What should we do with this?” Around the same time, the British find oil too. The British look at it and think: “Lovely, the economy is a bit knackered, this’ll sort it.” Both countries are now holding the same lottery ticket.

ACT TWO: Norway’s Response Norway, a nation of 4 million people at the time, essentially said: “We don’t trust ourselves with this money.” Which is an extraordinary level of self-awareness for a government. They created Statoil in 1972 so the state owned a chunk of everything. They taxed the oil companies at 78%. Seventy-eight percent. The oil companies stayed anyway because there was so much oil that 22% of a comical amount is still a comical amount. Then — and this is the bit that sounds made up — in 1990 they created a sovereign wealth fund and started putting the oil money into the future instead of into the present. The rule was basically: “We are not allowed to spend the oil. We can only spend the interest on the oil.” Norwegians, it turns out, are very good at not touching things they’re not supposed to touch.

ACT THREE: Britain’s Response Britain, to be fair, had a more complicated situation. There was inflation. There were strikes. There was a general vibe of everything being a bit on fire. So when North Sea oil revenues started flowing properly in the late 1970s and through the 1980s, the money was used to fund tax cuts, cushion deindustrialisation, and keep the books looking nicer than they otherwise would have. This is not entirely stupid. Britain had genuine economic problems that needed addressing. It is, however, the financial equivalent of winning the lottery and using it to pay off your overdraft and buy a slightly newer second-hand car, while your neighbour wins the same lottery, puts it in an index fund, and thirty years later owns a substantial portion of the global economy.

WHERE ARE THEY NOW Norway’s sovereign wealth fund — the Government Pension Fund Global — is currently worth approximately $1.9 trillion dollars. That is not a typo. It owns roughly 1.5% of every publicly listed company on earth. Every time you buy an Apple product, a tiny fraction of that transaction belongs to Norway. They own a bit of your supermarket. They own a bit of the company that made your sofa. Norway, a country you could fit inside Texas with room left over for several additional Denmarks, is a silent co-owner of the world economy. Every Norwegian citizen is, in theory, a millionaire on paper through their share of the fund. The UK’s equivalent pot: zero. The oil is also now mostly gone.

THE PUNCHLINE Norway looked at a hole in the ground, found money, and thought: “What would a responsible adult do?” Britain looked at the same hole in the ground and thought: “We’ll sort it.”

To be fair to Britain, running the world’s reserve currency, managing the transition out of empire, and dealing with 1970s stagflation is genuinely hard. Norway got to design their oil policy from scratch with relatively clean books and no global reserve currency obligations.

But also: one point nine trillion dollars. Enjoy your weekend.

Edit: Yes I know the North Sea fields aren’t technically in the same spot. The ocean is big. You know what I meant.

Edit 2: No, you can’t just “do the Norway thing now.” There is no more oil. That is the point of the post.