Unless you’ve been living under a rock for the last few months, you’ll have heard about the oil price crash.
The price of a barrel of crude oil fell from over $110 to less than $55 in the space of just fifteen months.
It’s big news here in Norway as energy has driven the country’s economy for forty years.
Yes there will be short term pain, highlighted by the 7,000 job losses in the Norwegian oil industry last year. But I would argue the falling oil price can be good news for Norway and in particular the future of Norwegian entrepreneurship.
Firstly, Norway’s population is highly-educated and highly-skilled. Previously these technical experts simply rocked up to the oil industry and claimed their million-krone salaries. But with such jobs becoming less common, those skilled engineers could put their problem-solving minds to work on other technologies to change the world, in the energy industry or otherwise.
Persuading talented people to forego the oil industry in favour of risking it all on entrepreneurship has long been a problem for Norway. Perhaps we’re at a turning point.
Secondly, the Norwegian krone has dropped sharply against the Dollar, Euro and British Pound in the last few months. When I moved to Norway, GBP £1 bought roughly 8.5kr. Today, that same Pound buys 11.6kr. That’s quite the change. Norwegians might have to get used to spending more money on their holidays på Syden, but both incoming tourism and exports could flourish. In the space of a year, Norway has become more competitive on the international market.
If you as a startup founder price your product in US Dollars or Euro (and you should), the movement in the exchange rate will have been great news for your cash flow.
Is the currency movement temporary? Clearly linked to the big question of the oil price, really only time will tell.
Economic analyst and Forbes contributor Mike Patton has this to say:
“This current decline may cause some drillers to exit the market, especially if prices remain low for an extended period and their financial reserves expire. You see, there is a common belief (or hope) among oil companies that these lower prices are only temporary. Perhaps they’re correct. Perhaps they’re not. However, with fewer companies in this space, there will be less supply and if the global economy does indeed rebound, this combination could cause prices to trend higher. Maybe not back to prior levels though, at least not for a while.”
Whatever happens over the months and years to come, Norway seems to be waking up to the question of what happens when the oil runs out. For me, this is good news for Norwegian innovation and entrepreneurship.
Do you agree?
Join us in Trondheim, Norway, on 18 & 19 March as we seek to awaken the entrepreneurial mindset at Technoport 2015.
Photo credit: Pete Markham