Profit and the Pursuit of Energy: Markets and Regulation by Jonathan D Aronson & Peter F Cowhey

Author:Jonathan D Aronson & Peter F Cowhey [Aronson, Jonathan D & Cowhey, Peter F]
Language: eng
Format: epub
Tags: International Relations, Political Science, General
ISBN: 9781000308297
Google: T02fDwAAQBAJ
Publisher: Routledge
Published: 2019-06-26T12:54:23+00:00

Common Policy Outcomes in Norway and Britain

What conclusions can we draw by comparing the impact of British and Norwegian domestic industry politics on government regulation or production in offshore markets? In short, although domestic politics differed, policy outcomes were very similar. Between 1965 and the early 1970s, both Norwegian and British governments intervened in gas market pricing and distribution but left oil markets to multinational oil companies, just collecting taxes and royalties on their production. Soon after, economic distress and revenue shortfalls led Labor governments in both countries to seek more active state roles, generating oil profits and managing national oil supplies. State oil companies entered oil production markets in 1972 (Statoil) and 1974 (BNOC).

Different intersectoral ownership structures and contrasting domestic political situations produced variations in Norway and Britain's North Sea oil policies. In Norway, independent shipping companies had sufficient industrial strength to cross-invest into oil production and subcontracting. In order to gain compensation and access to market contracts or to halt oil, however, both shipping and fishing interests mobilized threats against government through Parliament. Trade unions pressured the government for offshore employment. In contrast, in Britain international oil companies dominated national shipping and were able to deter traditional shippers from entering oil production. So while British labor unions demanded offshore employment, shipping resisted government interference. Fishing interests lacked enough strength in Parliament to force major government or oil company concessions.

Despite these differences in industry structure and politics, very similar policies emerged for oil, gas, and related industry in the North Sea by the end of the 1970s. State oil companies and multinational oil companies controlled oil and gas production, but gas distribution was still primarily government controlled. In both countries governments procured offshore contracts for shipping through informal preferences regarding oil and gas subcontracting work, although the effort was far greater in Norway (reflecting shipping's greater leverage). In Norway, preferences were channeled through Statoil's share offshore, while in Britain the government's Offshore Supplies Office encouraged foreign operators to use some British companies offshore, mostly in response to labor union demands. Domestic industries that could not integrate with the oil industry were displaced. Both governments initiated compensation policies for fishing, although in Norway a northern fishing coalition temporarily halted government northern drilling plans anyway.

Why did common policy outcomes result if domestic politics differed? One obvious answer is that similar government and multinational oil company policies overwhelmed the divergent impacts of domestic industries. Both governments aimed to control gas pricing and distribution and to reserve the national share of oil production for state oil companies. In both countries, multinational oil companies responded to government intervention by retaining control over exports but conceding shares of production to state oil companies and, later, shares of subcontracting to domestic companies. Thus, different coalitions of domestic political influence in the two countries had more impact in determining amounts rather than kinds of concessions regarding production and subcontracting.

Norway and Britain's similar North Sea policy outcomes were reflected in the structure of sectoral investment, production, and industrial organization.

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