Norway' s Election Results: the victory of the Left may add more uncertainties to the fossile fuel markets

 

Norway, the Scandinavian nation that is Western’s Europe’s major oil producer, is about to get a government led by its Labour party in the coming days.

The opposition led by Labour party achieved a landslide victory, gaining over 100 seats in 169-seat parliament in which the winning party just needs 85 seats.

The election in Norway was a major concern for analysts in the crude oil markets, in particular and any other markets in general, due to its status as one of the wealthiest nations on the planet. In addition, it is Western Europe’s largest oil and gas producers with an enviable welfare state for its citizens with an impressive sovereign wealth fund of over $1.4 trillion.

Although the future role of fossil fuel was at the centre of election campaigns of all major parties, the Labour party wanted to address what it called, ‘social inequalities’, in addition to the former.

Both Labour party and the Conservatives that lost the election, prefer gradual transition to renewables to knee-jerk abandoning urges of the Greens, which is part of the opposition coalition.

Since the revenue from oil and gas accounts for 14% of Norway’s GDP, moving away from such a source of revenue at a stroke is easier said than done. In this context, the move by the newly elected government and its predecessor in exercising caution is understandable.

The newly elected government will certainly expand Norway’s renewable drive in order to address the grievances raised by its left-wing partners while keeping them on board.

Simultaneously, it may try not to hamper the current activities of its oil and gas industry that directly employ over 150,000 people and millions at secondary level; it cannot ignore the fact that 40% of its exports are from oil and gas sector.

At present, we are in the middle of a gas crunch in Europe and Norway’s oil and gas production is vital for the region in the coming months, especially when approaching the harsh winter.

The fact that the UK was forced to fire up some coal power stations last week, when there was not enough wind to turn wind turbines in producing electricity, shows the vulnerability of the nations if they rely completely on renewables without a viable substitute; it happened when the country faced with gas supply problems.

Of course, Norway will not turn its back on its oil and gas industry in a matter of months. It cannot ignore the concerns of the Green partners of its new government either. On balance, the country will try to walk the tight rope when the emotions, both pro and against fossil fuels, will mimic the Northern Lights in the background of political realm.

The political developments, especially related to an election fought in a campaign based on the vital industry, however, are adding additional uncertainties to the oil and gas markets.

There are enough concerns already in the Middle East that keeps the markets in a loop of perpetual uncertainty. Oil and gas markets cannot afford to add more of them and to be at the mercy of whims and fancies of impulsive political developments.