It was from this lesson that legislators began to understand the need to put away large percentages of their oil profits and to not depend so much on spending that cash flow. After the recession of the 1980s, Norway drastically re-examined its oil policy from both a fiscal and regulatory perspective. Up into the late 1980s, "foreign oil policy followed what was called a 'purely commercial line.' That is, it was not desirable to declare officially that political evaluation were included in its design," (Austvik 1989, p.1). This lead Norway to be established as a "free rider" within the global oil market. According to research, "As a 'free rider' in the market, Norway was then also in the best possible position; she could increase her production and at the same time reap the price benefits deriving from other counties' production reductions," (Austvik 1989, p.1). The recession of the 1980s lead to complications which forced Norway to use this better bargaining position as a tool to help establish a more secure future -- one not so vulnerable to recessions and oil price drops. In 1990, to ensure better fiscal health in future years, the Norwegian government established the Norwegian Government Petroleum Fund after the Act on the Government Petroleum Fund was adopted into legislation (Skancke 2009). In this fund "money will only be allocated to the Fund when there is a budget surplus," (Skancke 2009, p. 318). It has since been adopted for use as a pension fund which ensures pensions for Norwegian citizens thanks to massive oil profits. Many also state that "The Petroleum Fund can also be seen as a fiscal management tool to ensure the transparency in the use of petroleum revenues," (Skancke 2009, p. 320). The establishment of the Fund shows a new direction for Norwegian oil policy and its devotion to saving oil wealth for future generations and not recklessly spending it on the needs of just today's generation.

Today, Norway is still not completely out of hot water. Although its policy has been changed to fit the needs of future generations, the current health of its oil production still proves vulnerable. Statoil, one of its top domestic oil companies, is beginning to show signs of a decline after years of massive profit increases. This has the potential to lead to its ultimate decline; "Statoil's results are below industry average, these assets could make it a vulnerable target for an unfriendly takeover," (Noreng 2000, p.1). As one of Norway's top oil companies it is an example of the health of oil production within the country. Currently, it is not pulling in numbers like it used to and so "Statoil is the subject of criticism because its return on capitol is below industry average and because its foreign ventures, as a whole, have not been very successful," (Noreng 2000, p.1). This is bound to also have future changes within Norwegian oil policy as developments continue to unfold.

Today, Norway's strict regulatory policies are coming into question. With the vulnerability of major oil producers such as Statoil, "licensing policy is likely to change, giving easier access to independent and small oil companies," (Noreng 2000, p. 2). This would help spur industry with smaller companies taking over what was once controlled by only a few elite powerhouses. In order to stimulate more activity within the oil sector, Norway must lower some of its regulatory practices. The nation has long been criticized over its exercise of strict regulations, but without the ability to follow up on them. Even with Norway's much higher initial requirements and standards, "the most serious accident so far has taken place in Norwegian waters, revealing insufficient preparedness and control," (Noreng 1980, p. 249). Thus, the country is looking towards more lax regulations, yet without sacrificing its true commitment to the safety of the environment.

In today's market, the production of oil is still a major force within Norway's economy. In fact, "In 2005, the petroleum sector accounted for 25% of the GDP in Norway. Through direct and indirect taxes and direct ownership, the state is ensured a high proportion of the vales created from petroleum activities," (Erikson 2006, p. 3). Although not as impressive as in past decades, these are still impressive numbers. Oil profits represented 52% of all of Norway's profits from exports in 2005 (Erikson 2006). Another major benefit Norway has in regards to its ability to benefit from large oil profit percentages, "oil and gas production exceeds domestic consumption many times over," (Frognes et al. 1982, p. 46). This means that with little domestic need for the product,...

This will continue to bring in large oil profits to be used in the Fund to provide pensions for Norwegians.
The Competitive Position of Norway

Norway has always held a great competitive advantage above other major oil producing nations. For one, it has enjoyed a great level of political stability, which has allowed for better management and handling of oil production profits. It has also made other purchasing nations more secure with their investments in Norwegian oil production. On top of this, Norwegian oil policy has also been strong too provide for domestic business and not let foreign capitol take over its most valuable resource. This has definitely proven successful; "The Norwegian policy of promoting the local supply industry, especially early in its oil history, made it possible or Norwegian firms to compete with multinational energy suppliers, even on specialized task," (Davis 2006, p.72). Thus, smaller and domestic firms have the ability to compete with major global powerhouses like Mobile.

Another major step into a different direction for the oil policy of Norway is its attention geared towards future generations. Many Norwegians believe that they "have an obligation to ensure that also future generations will benefit from the oil wealth," (Erikson 2006, p.6). It is an ambitious and selfless objective, one which will ensure greater and more stable economic health even within the midst of declining oil reserves. Since this mission was set in place, the Norwegian Ministry of Finance has" introduced budget policy guidelines that recognize the special nature of petroleum revenues: Central government's net cash flow from petroleum operations is transferred in its entirety to the Government Pension Fund -- Global via the state budget, whereas the guidelines stipulates that only the expected real return on the Fund should be returned to the budget for general spending purposes," (Erikson 2006, p., p. 6). The Fund regulates oil profits into a manageable resource for pensions through long-term regulation of petroleum profits by the government (Velculescu 2008). It helps ensure a better future, both for current working Norwegians, as well as future generations who will definitely not see great future profits from oil production in the region of the North Sea. The Fund is now one of the largest retirement funds in the world, with an estimated worth around 160 billion Euros, (Norway: The Official Site in Australia 2009). It is an impressive example of how a nation can turn oil profits into a viable and long lasting way to boost the domestic economy without overzealous spending, which almost always leads to some sort of crash base on the extreme dependence on oil profits. Yet, even a fund built on the massive wealth of oil profits is vulnerable in today's declining financial markets. The return of the Fund fell by 23% in 2008, loosing around 633 billion kroner, or 89 billion dollars, (Joshi 2009). However, all domestic markets are suffering in the wake of a global financial crisis. This slight decline does not signal the death of the Fund, and many future generations of Norwegians will still continue to enjoy the benefits of oil production and profits seen within their nation's borders through the Pension Fund.

Today, the resources in the Fund are being used to help diversify the nation of Norway's wealth. Recent budgets show heavy investing with the resources in the Fund; "The Fund's benchmark portfolio for equities compromises more than 7,000 equities across 47 countries, whilst the benchmark portfolio for bonds compromises about 10,000 bonds from about 1,600 issuers in 21 countries," (Ministry of Finance 2009, p. 1). Investing in foreign markets will help diversify the nation's economic and fiscal resources. This will lead towards a further stance on its previous dependence on oil profits alone to boost the economy. The assets of such investment are located exclusively abroad; "This strategy ensures risk diversification and good financial returns," (Velculescu 2008, p. 1). Currently the half of the Fund's assets resides in Europe, with the other half split between the U.S., Asia, Australia, and South Africa (Norway: The Official Site in Australia 2009). So far, this strategy of heavy foreign investment has paid off for the Norwegian mainland. According to recent research, "The investment strategy has produced a healthy 4.3% average annual return during the past decade," (Velculescu 2008, p. 1). Even more impressive, "Morgan Stanley calculates that such funds may control…