Norway’s Shift From Oil Starts With Two Left Feet

Norway's prime minister is fond of saying the nation is facing a ``new normal'' as a decade-long boom in its petroleum industry starts to fade. Erna Solberg has given little explanation of what that means, except to say that ``knowledge is the next oil'' and ``fish will be Norway's Ikea,''  ideas she echoed in a speech on Friday at her party's annual convention in Oslo.
It's no wonder then that economists are scratching their heads as to what will fill the gap in the economy once oil takes up less space.
The biggest element crippling the oil and non-oil industry is the exorbitant price of labor. Average hourly wage costs in Norway were 47 percent higher than those in the European Union last year, according to government statistics.
``And that's after taking into account the considerable weakening of the krone through 2013 and 2014,'' said Kari Due-Andresen, chief economist at Svenska Handelsbanken AB. ``This is hardly a good starting point for a major transition.''
Rising oil and gas prices over the last 15 years kept Norway afloat, even during the financial crisis when the rest of the world was suffering. As western Europe's biggest crude producer, the country relies on oil and gas for more than one-fifth of its gross domestic product.