PolicyMic: Every Single Person in Norway Became a Millionaire

Last week, Norway’s sovereign wealth fund — commonly known as oil fund — reached to NOK 5.11 trillion ($828.66 billion) due to high global oil and gas prices. As a result, everyone in Norway became a theoretical millionaire, writes PolicyMic.

In the article, Emily Barasch reminds Norway is sthe second-happiest place on Earth according to the UN’s World Happiness Report 2013, and now the citizens of the country are also amongst the world’s most financially secure people.

“Norway’s fund has some detractors, who argue that its investment strategy is risky and oil-dependency is dangerous with the growing proliferation of alternative energy solutions. But its success only proves that it’s smart use of money in this volatile economic global environment”, writes Barasch. 

The author also urges politicians in the USA to think about how, like Norway, they can — by taxing and regulating — create future wealth, not just debt with the burgeoning natural gas market in U.S.

About the Fund

The Government Pension Fund – Global (Norwegian: Statens pensjonsfond – Utland, SPU) is a fund into which the surplus wealth produced by Norwegian petroleum income is deposited. The fund changed name in January 2006 from its previous name, The Petroleum Fund of Norway. 

The fund is commonly referred to as The Oil Fund (Norwegian: Oljefondet). As of the valuation in June 2011, it was the largest pension fund in the world, although it is not actually a pension fund as it derives its financial backing from oil profits and not pension contributions. As of September 30th 2013 its total value is NOK 5.11 trillion ($828.66 billion), holding one percent of global equity markets.

The purpose of the petroleum fund is to invest parts of the large surplus generated by the Norwegian petroleum sector, generated mainly from taxes of companies, but also payment for license to explore as well as the State’s Direct Financial Interest and dividends from partly state-owned Statoil. Current revenue from the petroleum sector is estimated to be at its peak period and to decline over the next decades. 

The Petroleum Fund was established in 1990 after a decision by the country’s legislature to counter the effects of the forthcoming decline in income and to smooth out the disruptive effects of highly fluctuating oil prices.

The Petroleum Fund’s Advisory Council on Ethics, established 19 November 2004 by royal decree, observes the activities of the fund according to ethical guidelines.

According to its ethical guidelines, the Norwegian pension fund cannot invest money in companies that directly or indirectly contribute to killing, torture, deprivation of freedom, or other violations of human rights in conflict situations or wars. Contrary to popular belief, the fund is allowed to invest in a number of arms-producing companies, as only some kind of weapons such as nuclear arms, are banned by the ethical guidelines as investment objects.

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