On Christmas Eve in 1969, something magical happened.
A few hundred miles off the coast of a small fish and potato exporting country in Northern Europe, a massive oil block was discovered. You might know it as the Ekofisk oil field in the North Sea.
That small country was Norway, and it’s become the largest oil producer in Western Europe thanks to the discovery of the Ekofisk, which is still producing today.
Petroleum production and Norway’s subsequent embrace of natural gas (Norway is third-largest natural gas exporter) have together made the country one of the wealthiest nations per capita in the world.
With its oil fortune, Norway was able to build the world’s largest sovereign wealth fund, totaling $850 billion, to be used as a buffer between volatile oil revenue and the non oil-based economy.
The fund contains enough money to give every Norwegian citizen approximately $170,000, and depending on the oil market, it’s expected to reach $1 trillion in six to seven years.
Yet despite Norway’s vast stake in the future of oil and natural gas, it’s currently attempting to divest all of its sovereign funds from any fossil fuel investments.
You would think a country that owes the lion’s share of its wealth to oil would invest all it can to keep the money flowing. However, Norway appears to answer to what some would consider a higher calling.
Contrary to the natural resources that brought it into the 21st century, Norway gets virtually all of its electricity from hydropower and plans to reduce its greenhouse emissions by 30% as soon as 2020. The country prides itself on being one of the greenest nations in the world, and it isn’t stopping there.
What’s even more surprising is that Norway, with a population of just over 5 million, represents the second-largest market for Tesla Motors Inc. (NASDAQ: TSLA) behind the United States and has the highest per-capita share of Tesla vehicles in the world. This is attributed to the fact that the Norwegian government has highly incentivized the purchase and use of Tesla cars.
If you drive a Tesla in Norway, the government pretty much treats you like royalty. Tesla drivers gain the privilege of:
- Driving in the bus lanes on highways
- Parking in designated areas
- Going through tolls for free
- Having their annual registration fees waived
- A reduced sales taxes for the purchase of a Tesla vehicle
- A substantial deduction in income taxes if they drive for a living (future Uber drivers, anyone?)
So unless you work for an oil company, there really isn’t any reason not to drive a Tesla in Norway. It isn’t only significantly cheaper — it’s also better for the environment.
And the Norwegian people have responded in droves to these government-sponsored incentives.
Tesla sells fewer than 25,000 cars per year, while Norway purchases an average of 436 Tesla models per month — about 21% of the electric car manufacturer’s monthly sales.
This past March, Norwegian citizens purchased about 1,500 cars from Tesla, the most cars purchased by any single country from any single car company in one month ever. One out of every 10 registered cars in Norway was a Tesla that month.
However, these subsidies aren’t going to last forever. Norway is seriously considering allowing many of the tax breaks to expire once the Norwegian Tesla population reaches 50,000.
So if you’re living in Norway and are in the market for an electric car, you’ll probably want to hurry it up.
Frankly, with access to such an enormous cash pool provided by the countries that burn Norwegian oil and gas, Norway can do virtually whatever it pleases.
With over $850 billion in capital, the country can invest in the industries it wants to foster and avoid the ones it wants to see wither.
Companies can make Norway’s investing blacklist depending on what they produce or how they produce it. Some major industries that top the list are those that produce nuclear weapons, tobacco products, and alcoholic beverages.
Norway also refuses to do business with the retail giant Wal-Mart citing serious, systematic violations of human rights.
Shockingly, Norway is now moving away from investing in oil and natural gas, the industries that granted its financial freedom. Despite being a giant exporter of fossil fuels, the nation wishes to distance itself as much as possible from those commodities without interrupting the steady cash flow they bring.
Norway champions its heavy use of electric cars and its thriving hydropower industry, but those policies only apply within its own borders. 100% of Norway’s oil reserves are offshore, far removed from its minimally polluted fjords.
In other words, Norway’s unofficial policy is to burn its natural resources abroad so it can afford a greener future at home. And the hypocrisy comes full circle.
They say there’s a great lie buried beneath every fortune. If that isn’t true, I haven’t found the exception yet.