23/ One thing that is very Norwegian, and relevant here, we are a high-trust society. On every level. But for this particular matter: we trust our government much more than most other populations. And if they say the interest rate has to go up, we say: OK.

But what if they’re just wrong?

@malwareminigun yeah, although Statistia says oil is 23% of GDP down from 35% last year, up from 11% in 2020, which could be seen as having the potential to make the currency volatile.
https://www.statista.com/statistics/1450033/oil-industry-share-of-gdp-norway/

@Patricia

@Patricia @danlyke

I generally find the petroleum taxation and the Government Pension Fund Global (GPFG, aka "the oil fund") both confusing and fascinating.

This page has a nice overview of the whole mechanism: https://www.norges-bank.no/en/topics/liquidity-and-markets/Foreign-exchange-purchases-for-GPFG/

What I believe might be an overrated misconception is that Norway will go bankrupt quickly if we lose the petroleum tax. Yes, the investment growth will need to be less aggressive (at least for some time), but the value of the GPFG itself will just increase as the value of the investments increases. And yes, the amount used to keep the state budget deficit in balance will most likely need to be adjusted.

The overall value of the GPFG is so enormous (almost 18 × 10¹² NOK; I lack the English vocabulary for that kind of amounts), invested in closer to 9000 companies in 72 countries ... with a good management, that value will just continue to increase - as long as the government does not decide to over-spend what is available - and the parliament seems to be in agreement here. More details on GPFG: https://www.nbim.no/en/

For that amount of investments to go bad - basically the economy across the whole world would need to totally collapse quite abruptly, almost at once everywhere.

It seems the overall generic message to the public is that the petroleum tax will reduce the future investment possibilities in the GPFG. They seldom seem talk about how that fund could actually develop without the petroleum tax - except "it won't be as good as now".

That doesn't mean I think we should just shut down the petroleum based production over night; it needs to be more controlled, phasing it out over some years - to avoid too many unemployed workers at a short time, etc, etc. But I struggle to see it as a complete disaster to stop the production over time, especially due to the size of the GPFG.

We just need to think differently about how that fund is managed and what the government can spend from it for the budget deficit. Norway just need to readjust itself to new realities.

Other initiatives from the government to replace the petroleum tax with something else will happen too; we live in a capitalistic state - we always wants more.