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Comment by jessriedel | Hacker News Reader

> Taxes are the same here in Norway as is in Australia, but it’s such a richer country.

This is not a sensible comparison. Norway produces 313,661 barrels per day per million people, which is higher than all other countries besides Kuwait, Saudi Arabia, and the UAE. Australia produces 12,010 bbl/day/millon-people, i.e., just 3.8% of Norway's per capita production.

https://en.wikipedia.org/wiki/List_of_countries_by_oil_produ...

The extreme amount of mineral wealth that each Norwegian citizen has inherited makes Norway very difficult to compare to non-Arab countries on any issue connected to economics (i.e., basically everything).

Relatedly, the cost of living in Norway is much higher than Australia, despite Australia's extreme remoteness.

https://www.numbeo.com/cost-of-living/rankings_by_country.js...

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Australia produces 12,010 bbl/day/millon-people

You should not look at just oil, but natural resources in general (in case of Australia, iron, coal and gold in particular).

Norway still comes out on top, but only by a factor of ~2 (cf https://atlas.media.mit.edu/en/profile/country/nor/ https://atlas.media.mit.edu/en/profile/country/aus/ ).

I did, which is already reported further down in this thread, and my eyeball estimate was the Norway exceeded Australia per capita by more than a factor of 4. Happy to see more accurate numbers.

Sure. We're looking for something that's equivalent to Norway's oil industry. According to the links I gave, Norway's top exports are Crude Petrolium and Petrolium Gas, in 2017 accounting for 53% of all exports at $55.8B. Assuming a population of 5.3M, this translates to $10.5k per person.

Australia's top exports are also based on natural resources, namely, Iron Ore, Coal Briquettes, Gold and Petroleum Gas, accounting for 60% of all exports at $144.6B. Assuming a population of 24.6M, this translates to $5.9k per person.

Thanks. As discussed further down the thread, it is disingenuous to add natural resources to Australia's total but not Norway's total. (Metals and fishing are both 10% each of Norways exports.) This makes it 15.5k per person in Norway, giving a ratio of 3, halfway between the ratio I eyeballed (4) and the one you did (2).

As far as I'm aware, metals and fishing do not contribute to the Government Pension Fund of Norway, which is why I did not include them on the Norwegian side and similarly only looked at the top items on the Australian side (eg adding Refined Petrolium on the Autralian side would push the balance closer to 2 again).

Point is, while Australia isn't quite as well off as Norway, there are resources aplenty to pull off something similar on a somewhat smaller scale.

That may be your point, which is fine, but the original comment I was replying to was comparing the tax rate of Norway and Australia, and I was arguing this is not a sensible comparison in light of the much larger natural resource inheritance of Norway.

I think the original comment only really mentioned taxes in passing and then the discussion went off down a rabbit hole; but a wonderful rabbit hole in which each subsequent comment added more interesting and relevant information.

Fishing, unless you feel that the fisheries are being overfished, is in quit a different bucket because it's a renewable resource.

Metals is an interesting case because on the one hand they are definitely a non-renewable resource. On the other hand, it seems like there's a difference between exporting ore and exporting refined metals, in terms of whether it's "just" resource extraction or not...

you also have to look at extraction costs - Statoil is very high yield and low cost extraction which survives even the tightest OPEC squeezes.

Iron ore extraction isn't bad but it's nowhere near as profitable as Norway's oil extraction

You'd have to do that across the entire range of resources and then divide per capita - on that basis I think Norway would blow by 4x Australia just based on off-the-top of my head estimate

Add lithium to that list.

Australia exports (perhaps much) less than $1B/year of Lithium, so that's way smaller than the rounding error of this discussion.

The quantity is not a rounding error, whereas the value is low only because the Australian government prices lithium far below its value.

Sure can't deviate from its modus operandi; it's not Norway, after all.

And by that I mean that Australia favours enriching corporate coffers over collection revenue from its natural resources so as to benefit the whole nation with a long term view.

It's not the yield, but the profit.

Statoil makes huge margins on their oil because once the tricky rig was set up, it just comes out like Gold.

Most other natural resources have much thinner margins due to processing, overhead.

'Sweet Crude' i.e. the kind you get in the desert, and 'sweet once it's setup to be' i.e. Statoil ... this is a different thing together from other natural resources.

Norway is like Kuwait, it's almost impossible to compare it to anything else.

They can leave the Oil in the ground for now because they are very rich and have more money than they know what to do with.

You know what also comes out like gold? Actual gold :p

As far as I'm aware, profit margins on iron aren't too shabby either, though I'd have to do some digging how this all shapes up in these specific cases (Norwegian oil vs Australian gold, iron and coal).

The difference is not just profit margins, but very different capex and opex. Capex on oil rigs is large (especially offshore), but opex is pretty reasonable. I would imagine iron mining has much higher opex. A better approach it may be to loot at the graphs of average fixed/variable/total cost, which are very different.

I think the broader point is that by nationalizing a shared resource, Norway achieved an outcome that benefits their entire society.

They are fortunate that they are one of the few countries with functional government that could handle the oil wealth responsibly.

If you compare it to the United States, we socialize many of the risks associated with oil production, refining and transport, and let the extractors, refiners, and transporters reap the benefits.

There's no shared resource. It requires risky exploration and investment in extraction. Do you really think the 25m Australians can afford to gamble on hundreds of billions on LNG terminals? One bad investment or a big drop and the whole country is bankrupt.

Currently private sector and foreign business takes the risk. Then Australia gets a share of the profits through royalties and taxes as well as the labour income through employment of workers.

> It requires risky exploration and investment in extraction.

Which represents a tiny amount of value compared to the energy stored in the oil.

>Currently private sector and foreign business takes the risk.

Australia provided mineral exploration incentives of $31m for 2018/19 at the tax payer’s expense, to mitigate that risk.

https://www.financeminister.gov.au/media-release/2018/06/26/...

As another fellow Aussie emigrant (not to Norway though), I believe they were not only talking about oil resources but all the other natural resources Australia is selling.

My bet is Uranium is going to be an important one too in the future.

Eye-balling the numbers, you'd pick up less than a factor of 5. I encourage you to look at the details and report back. You should also correct for the natural resources that Norway has the Australia lacks, like fish (almost 10% of Norway's exports inclusive of oil!).

Australia doesn't have ocean access and fishing industries?

Fish makes up just 0.13% of Australian exports

https://atlas.media.mit.edu/en/profile/country/aus/

Next time, consider looking the number up yourself and reporting back rather than just asking the question and so forcing me to look up the answer for you (or else look like I'm ignoring the issue).

Fish being a minor part of Australian exports is a claim with absolutely no relationship to whether or not Australia has fish. You claimed it didn't, and that is not credible.

In context, my claim was clearly that Australia did not have access to fishing resources that had economic effects that were remotely comparable to its total exports.

Energy is about 50% of Norway's exports, and minerals + energy is about 60% of Australia's exports. These are extractive industries that are structurally similar.

Norway exports about $50 billion USD / year. Australia exports about $120 billion USD / year.

This is probably why the Australian is comparing the situation with Norway.

https://www.minister.industry.gov.au/ministers/frydenberg/sp...

https://www.norskpetroleum.no/en/production-and-exports/expo...

I'm aware that comparison he's trying to draw, but the comparison has to be fair. First, most obviously, Australia has almost 5 times the population of Norway! Second, if we're going to start increasing the scope of exports we're including, to make a fair comparison we should include minerals in Norway's total (not just Australia's), and we should really include other resources that Norway has that Australia doesn't (rather than just picking a category where Australia has larger exports). What are the numbers in this case?

Again, I think this works out to a per capita endowment of that is still much, much larger for Norway, but you'd actually have to do a bit of work to check.

Compare respective sovereign wealth funds: https://www.economist.com/finance-and-economics/2016/09/24/h...

IMO you're on a hiding to nothing trying to support your position that the comparison isn't valid. The economic export situation is structurally quite similar between Norway and Australia, and the difference in how they've handled it is vast, far greater than any multiple in population.

Huh? No one disputes that the countries handle things differently. But if you want to say that one way of handling things is better, and the only evidence you give are better outcomes, then inputs ought to be similar. But if one country has 30 times or 3 times the input (corresponding to oil or most natural resources, respectively), then this is a very poor comparison unless you do a lot more work to correct for it.

Here's a simple way of looking at it: Norway has converted its resources into a $1 trillion pot of funds, while Australia has, to a first approximation and over a longer time frame, zero or less (the country runs a budget deficit). So it doesn't really matter if the input is 3 or 30 times bigger if the function converting it into output is broken.

To OP really between coal and LNG alone dalore is making a fair comparison.

Uranium is actually quite common; it's cheap because it's an extremely controlled market (who are you going to sell it to?) with fairly limited demand (it doesn't take that much uranium to run a power plant or make a nuke, a cube about a meter per side can run a reactor for a year). Because it's so cheap, it's not substantially prospected so there is a good chance there are large reserves that can be exploited if we go looking for them.

And, if it comes down to it, we can pull near-unlimited quantities from seawater at $200-1000 per kg (~10x current pricing). The costs of nuclear power generation are almost entirely capital costs and insurance, the fuel costs are practically a rounding error, so this does not substantially change the costs of nuclear power generation.

https://www.newsdeeply.com/oceans/articles/2018/06/28/the-nu...

So, uranium will probably never be super valuable. Strategically important, and nice to have in a conveniently accessible form, but not economically valuable.

An Australian's context here is that a minerals tax was proposed to build something remotely akin to the Norwegian fund, but was killed for political reasons. The key piece of the discussion for Australians is not the tax comparison or oil comparison that you've latched onto, but of a missed opportunity.

Where the Norwegians could appreciate what the sovereign fund meant for them, the attempt in Australia was lambasted as another tax, copped serious lobbying by mining giants, etc.

Granted it would have been nice to have a mining tax in collecting money for Australian social expenses.

However if they would introduce such a tax now then it might encourage new mining developments and let them be sped through the environmental checks faster than they are now. So there is a danger we would have many more Adani like mines popped up.

Though yet again maybe having a high enough mining tax would possible discourage such endeavours?

The major form of mineral production in Australia is mining, not oil.

Per http://www.worldstopexports.com/coal-exports-country/ in 2017 Australia exported $40.6 billion of coal, for a population of ~25 million. Per http://www.worldstopexports.com/iron-ore-exports-country/ it also exported $49.3 billion of iron ore. Per http://www.worldstopexports.com/gold-exports-country/ it also exported $13.1 billion of gold. Just between those three items that works out to ~$4k per person for the year.

Per http://www.worldstopexports.com/worlds-top-oil-exports-count... Norway exported $26 billion of oil, for a population of ~5 million. So about $5k per person for the year.

Now both countries do other resource-extraction stuff too. Norway's natural gas exports are almost equal to their oil exports, as far as I can tell. Australia's annual exports of natural gas seem to be in the $40-$50 billion range depending on the year you look at (it's grown a lot recently). And Australia is doing a bunch of non-iron-ore and non-gold mining too (gems come to mind).

Overall, per capita resource extraction revenue in Norway is certainly higher than in Australia, but it's not the "25x" higher than the oil numbers alone would indicate. Maybe 2x.

>313,661 barrels per day per million people.... Australia produces 12,010 bbl/day/millon-people

Would be way easier to understand the comparison if the notation would be the same on both numbers. I assume bbl means billions of barrels, this means Australia's number is higher by few orders.

bbl is market jargon for barrels, not billions of barrels...

So why not use the same for both numbers?

That's goofy, most abbreviations drop letters rather than adding them.

They are the same notation, look it up. If Australia was producing 12,010 billion barrels of oil per day per million people you'd probably be able to see that portion of the globe turn black from space, everyone in Australia would have drowned in it and an oil tsunami would be heading towards New Zealand.

Diamonds in Botswana, Copper in Chile, farmable land in the US, etc.

The point is that Norway has managed it's natural advantages to the benefit all of their citizens compared to other countries whose resources primarily enrich individual companies/owners.

For this Norwegian expat, it's extremely hard to not see Australian politicians as corrupt - and inept, prioritising the wealth of the rich over that of the nation.

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