The Politics of Oil-Producer Cooperation

By Dag Harald Claes | Go to book overview

9
Country Case II: Norway—
From Free Riding to Cooperation

The aim of this chapter is to describe Norway's role in the cooperation between oil producers, and to explain through a combination of external and internal factors the changes in the Norwegian behavior toward repeated calls for cooperation with the other oil producers, primarily the OPEC countries. The hypothesis is: The increase in production makes it increasingly harder for Norway to ignore the calls for cooperation, in other words, to remain a free rider.

The case of Norway highlights several of the underlying problems related to the oil-producer cooperation in general. During the period discussed in this book, Norway went from a situation with no petroleum resources (the first commercially viable field was discovered in December 1969) to a situation in which it finds itself the world's second-largest oil exporter. Norway has thus experienced most aspects of the size (read: market share) dimension emphasized in section 7.4. Contrary to most other non-OPEC producers, Norway has in different phases stated negative and positive attitudes toward cooperation with OPEC. Furthermore, Norway has few traditional political ties with the members of OPEC. Norwegian political relations with these states are entirely "oil-driven." This makes other explanations of the possible political ties between Norway and key OPEC members unlikely.

Norway and OPEC compete for sales of oil and may simultaneously increase prices, provided coordinated production-limitation measures are effected. The asymmetry in the importance of these two actors makes it possible for Norway to avoid actually having to limit production, and at the same time OPEC's production limitations have the effect of realizing the collective good—a high price. However, as far as OPEC is concerned, the growth of producers outside the organization, combined with re

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