The British and Norwegian governments enjoyed their greatest advantage over the companies at the very end of the 1970s. Oil prices were high, and so were the fortunes of OPEC. As we saw in the previous chapter, this advantage began to slip in the early 1980s as the price of oil, and with it the power of OPEC, started a steady decline. Ironically for Britain and Norway, this decline was in some part due to the success of their own policies in the North Sea and the impact their oil was now having on the world market. The weakening of the governments' position was most evident in the conflicts that arose with the companies over the taxation of North Sea revenues. Early in the 1980s, the weakened market closed the door to further encroachment by the state on company profits and increased the effectiveness of industry pressure to ease the tax burden. The British government relented first, grudgingly offering tax concessions to the companies in order to increase the level of activity on the UKCS. The Norwegians held out much longer, but they too were forced by a collapsing market to give way to company demands or face a dramatic decline in activity. Governments conceded much during these troubled years, but in no way were they put at the mercy of the international oil companies. What emerged was a more realistic relationship built on common interests, which replaced the power struggles of the 1970s.
Both the United Kingdom and Norway enacted new petroleum tax measures in 1979/80 after crude oil prices nearly doubled in early 1979 following the fall of the Shah of Iran. While it appears both countries were reacting to the sudden increase in price, it turns out