A Tale of Two Oil Economies – Texas and Norway

A Tale of Two Oil Economies – Texas and Norway

3 June 2011

Global American Series

Norway is the Texas of Europe – it is Europe’s biggest producer of oil and gas (mostly in the North Sea). I just spent a week in Norway and wanted to know: “How does Norway compare to Texas in handling its oil wealth?” Read on and ask which path your state is on?

That is the subject of this week’s “Global American” radio program. The program starts with the little-known story I discovered on my trip about how a few Norwegians in WWII kept Hitler from getting the Atomic bomb, which would have won him the war and made London the first Hiroshima. It was made into a movie starring Kirk Douglas called “The Heroes of Telemark.”

Norway has been investing its oil wealth in the country’s medical and education sectors. Texas originally dedicated large portions of land to its Permanent University Fund, primarily for the University of Texas and Texas A&M University systems. But things have changed over the years.

Norway ranks as one of the best countries in the world to live with the highest standard of living. Unemployment is just 3%. Life expectancy is nearly 81 years. Voter turnout is 77%. When asked “Who became rich from oil in Norway?” a Norwegian diplomat said: “Nobody and everybody.” Oil raised all boats equally. Norway’s public education system is one of the best in Europe and the general level of education is higher than the European average. Tuition is free all the way through University, even for international students.

Texas has a different story. In 1999, when Governor Bush was still in office, Texas ranked 25^th in per pupil expenditures. After 11 years of Governor Perry being in office, Texas now ranks 43rd -- out of 50 states. In 2005 (during the ‘boom times’), Texas was the only state to cut average per pupil spending.

From 2002 to 2007, the Texas state budget was cut in terms of real dollar per-student funding for universities by almost 20% (35% for community colleges). Tuition costs

While Norway has one of the most transparent systems for tracking its investments, Texas has turned over its $23 billion Permanent School Fund (PSF) to an elected State Board of Education (SBOE) which has no financial expertise. The majority of the SBOE members are ideologues who insist on rewriting history books to put the Ku Klux Klan (KKK) in a more favorable light and dismissing the issue of slavery in the Civil War. Those books are then used by schools across America. Recently it changed advisors to NEPC, which had invested other pension funds in Bernie Madoff’s pyramid schemes.

The move cost Texas hundreds of thousands of dollars. When the PSF comes up short on funds needed for education, the taxpayers have to pick up the difference. Texas is the only state that allows an education board to control investments instead of just setting policy.

Yet Texas has legislators, like Sen. Dan Patrick of Houston, who said “schools will have to live with what they get, not what they need.” This is hardly a vision for success in a global, high tech economy. This is a recipe for disaster at a time when hundreds of thousands of high tech jobs remain unfilled because Americans lack the skills needed to fill them. Where have the Texas visionaries gone, men like Hugh Roy Cullen, Walter Fondren and Sid Richardson?

Is Texas going down the path of Nigeria, which squandered its oil wealth? It certainly isn’t following Norway’s example.

Tune in at 9 am Central on Business 1110 AM, streamed on www.Business1110KTEK.com and podcast 24/7 on www.GlobalAmerican.org

Which path in the global high tech 21^st century is your state taking – Norway’s or Texas’?

Michael Fjetland

Global American Series

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