Not So Pretty In Norway, Victim Of Plummeting Oil Prices

The sinking cost of crude has disrupted the Scandanavian country's national economy. Norwegians now start to ask how wide the hardship will spread.

The oil tanker Sten Frigg moored in Bergen, Norway
The oil tanker Sten Frigg moored in Bergen, Norway
Valère Gogniat

STAVANGER â€" Of course, you can find small souvenir bottles of crude oil. But there are also model offshore platforms, a quiz on Norway's energy resources and a simulated helicopter ride. But it's only at the end of a long hallway recounting the country's oil history â€" at Norway's Petroleum Museum in Stavanger â€" that there is a mention of the recent per-barrel price collapse.

The last sign of the visit says "Vanskelige Tider," or "difficult times." It reads, "The global oil markets have been through fundamental changes since the 1970s. Prices have risen, fallen, and risen again â€" several times. Norway is very vulnerable to these fluctuations and has little chance to influence them."

Petroleum provides jobs, directly or indirectly, to about 300,000 of the 5.2 million Norwegians. And since the world's most-used raw material has lost 60% of its value in one year, the local daily Aftenbladet has already counted 22,879 layoffs in the country.

"Almost all the private companies are, one way or another, linked to the oil industry," says Swiss ambassador Rudolf Knoblauch. "Here, when petroleum goes badly, it's the whole economy that goes down." Knoblauch, who receives us in a small lounge of his home in the outskirts of Oslo, explains that the country is currently thinking about how it's fundamentally changing. "But the question is: Is there a Norwegian economy beyond petrol?"

He's not the only one to wonder. After running through the streets of the capital, swept up in the frozen rain, Simen Sætre warms his hands around a large cup of tea. The author of Petromania, a book that studies his country's dependence on the black gold, says Norway's challenge is diversification. "Everybody's talking about it, but nothing is being done," he says.

In Stavanger's historic center. Photo: Andrea Heck

Like many Norwegians, Sætre believes his country's future involves exporting know-how and technologies that were initially linked to jobs around petroleum but that are transferrable to other industries. "We'll have to wait and see what goes on in Stavanger," he says. "For the moment, that’s where it's the most complicated."

Rising unemployment, declining real estate

Stavanger, precisely. Set on the country's southwest coast, the Norwegian oil capital is being hit full force by the plunging prices. The most obvious signs are the rise in unemployment (from 2.1% to 3.6% between August 2014 and 2015) and the decline of real estate prices (-3.7% for the second quarter of 2015). And there are others. Since last summer, it's impossible to connect Stavanger to Frankfurt or Paris with a direct flight. Launched last year, the connection between Stavanger and the Texas oil capital of Houston will stop running this fall.

Another example is that the number of foreign students at Stavanger's international school has fallen. "When there's a drop in the petroleum industry, there's an impact on the enrollment projections," the school's director says.

Ole Soeberg offers a metaphor. The chief investment officer of Skagen Funds, whose office is in a tower in Stavanger’s city center, believes the Norwegian energy industry must now rethink its purpose. "The situation is the same as for the horse carriage manufacturers in the early 20th century," he says. "Even though the tractor had just been invented, they kept on investing in carriages, when the number of horses used in fields had dropped by 80%." Like Sætre, he believes the country must build on its expertise in certain advanced technologies and export them abroad.

Drilling, from the sea to Mars

Or even to Mars. Zaptec, a startup with about 30 employees based in the Stavanger Innovation Park, managed to convince NASA to collaborate with it. Its techniques in plasma-based drilling, initially designed for the oil industry, could be used on the Moon, asteroids or the Red Planet. For now, Zaptec's first customer is the car manufacturer Renault, which is interested in its electrical car loading stations. Nils Christian Lærdal, the company's sales manager, briefly summarizes the benefits of being based in Stavanger: "Oil isn't doing so well. We see here a great opportunity to hire talented people."

But the oil industry hasn't had its last say because not all companies are affected in the same way by the drop in price. Erik Sverre Jenssen, the head of operations for Lundin Norway, a local branch of the Geneva-based oil company, explains that his company hasn't planned any layoffs. "We have frozen hiring since last summer," he says. "And the Christmas party might be a bit smaller than expected, that's all."

Turning his back to the stunning view of his office located in the Lysaker fjord, on Oslo's outskirts, he explains why Lundin has escaped the storm when layoff announcements have been multiplying in the industry over the past few months. "First, it's thanks to our success," he says. "We had nine employees in 2014, and we now have 350. But also because we employ almost 250 advisors. We will end two-thirds of these contracts, which is a more flexible solution."

Erik Sverre Jenssen says it's mostly subcontractors that are suffering from the current situation. "They've had to lay people off," he says. "And even if the price per barrel goes back up again, 2016 will be a very difficult year because the decisions made today are so radical that their impact will still be felt next year."

With or without petrol, Norway's economic future is hard to outline. But the Norwegian Petroleum Museum in Stavanger is ready: At the end of the hallway, and of its chronology, there's still space for a few more signs.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
Feed The Future

COP26 Should Mark A Turning Point In Solving The Climate Crisis

Slow Food calls for an action plan to significantly reduce and improve the production and consumption of meat, dairy, and eggs by 2050.

A new dawn?

If, as the saying goes, we are what we eat, the same also goes for the animals that end up on our plate. How we feed our own food can have knock-on effects, not just for our own health but also for the planet. We are now aware of the meat and dairy industry's significant carbon footprint, responsible for more than a third of global anthropogenic greenhouse gas emissions.

Large-scale cattle productions that favor pure profit over more sustainable practices also add to environmental woes through biodiversity loss, deforestation and pesticide use — with some of the world's richest countries contributing disproportionately: The five biggest meat and milk producers emit the same amount of greenhouse gases as the oil giant Exxon.

The good news is that we could meet — if we would — some of these challenges with an array of innovative solutions, as the fields of farming, breeding and nutrition look at ways to shift from centralized intensive agro industry toward a more localized, smaller-scale and more organic approach to production.

Cows fed corn and grain-based diets may grow larger and are ready to be processed at a younger age — but this requires significant energy, as well as land and water resources; in contrast, grass and hay-fed cows support a regenerative farming model in which grazing can contribute to restoring the health of soil through increased microbial diversity. Compared to highly processed GM crops, natural-grass diets with minimal cereals also lead to more nutrient-rich livestock, producing better quality meat, milk and cheese. Farmers have started focusing on breeding native animal species that are best adapted to local environmental contexts.

This new approach to agricultural practices is closely linked to the concept of agroecology, where farming works in tandem with the environment instead of exploiting it. If mowed a few times a year, for instance, natural meadows produce hay that is rich in grasses, legumes and flowers of the sunflower family, like daisies, dandelions, thistles and cornflowers. These biomes become reservoirs of biodiversity for our countryside, hosting countless species of vegetables, insects and birds, many of which are at risk of extinction. Until recently, these were common habitats in meadows that were not plugged or tilled and only required light fertilization. Today, however, they are becoming increasingly threatened: in the plains, where the terrain is used for monocultures like corn; or in hills and mountains, where fields are facing gradual abandonment.

It is worth noting that extensive agriculture, which requires smaller amounts of capital and labor in relation to the size of farmed land, can actually help curb climate change effects through carbon dioxide absorption. Researchers at the University of California, Davis determined that in their state, grasslands and rangelands have actually acted as more resilient carbon sinks than forests in recent years. Through a system of carbon uptake, these lands provide a form of natural compensation, going as far as canceling the farms' impact on the planet, rendering them carbon "creditors."

In the meantime, grasslands and pastures allow animals to live in accordance with their natural behavioral needs, spending most of the year outside being raised by bonafide farmers who care about animal welfare. A recent study by Nature found that allowing cows to graze out of doors has both psychological and physical health benefits, as they seem to enjoy the open space and ability to lie on the soft ground.

Some might worry about the economic losses that come with this slower and smaller business model, but there are also opportunities for creativity in diversifying activities, like agro-tourism and direct sales that can actually increase a farm's profit margin. This form of sustainable production goes hand-in-hand with the Slow Meat campaign, which encourages people to reduce their meat consumption while buying better quality, sustainable meat.

Others may assume that the only environmentally-conscious diet is entirely plant-based. That is indeed a valuable and viable option, but there are also thoughtful ways to consume meat in moderation — and more sustainably. It also should be noted that many fruits and vegetables have surprisingly large carbon footprints: The industrial-scale cultivation of avocados, for example, requires massive amounts of water and causes great hardship to farming communities in Latin America.

But forging a broad shift toward more "biodiversity-friendly" pastoralism requires action by both those producing and eating meat, and those with the legislative power to enact industry-wide change. It is urgent that policies be put into place to support a return to long-established agricultural practices that can sustainably feed future generations. Although no country in the world today has a defined strategy to decrease consumption while transforming production, governments are bound to play a key role in the green transition, present and future.

In Europe, Slow Food recommends that the Fit for 55 package include reducing emissions from agriculture activities by 65% (based on 2005 levels) by 2050. Agriculture-related land use emissions should also reach net-zero by 2040 and become a sink of -150 Mt CO2eq by 2050. But these targets can only be met if the EU farming sector adopts agroecological practices at a regional scale, and if consumers shift to more sustainable diets. If we are indeed what we eat, we should also care deeply about how the choices we make impact the planet that feeds us.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!