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The ripple effect of the petroleum industry. Which industries deliver?; Ringvirkninger av petroleumsvirksomheten. Hvilke naeringer leverer?

Technical Report:

Abstract

Extracting petroleum has a much larger rate of return of factor inputs than other industries. The 'excess' return is called the resource rent, which has brought significant revenues to the Norwegian government. Increased revenues have made it possible to conduct a much more offensive counter-cyclical fiscal policy through the current and past slumps, and the policy of spending the real return of accumulated rents have been important for our materiel welfare. Demand from the petroleum sector has also generated important impulses to the Norwegian economy. At the beginning of the oil age, 40 years ago, those impulses were of less importance. But a conscious policy to increase Norwegian firms' expertise together with the increase in demand from the petroleum sector has changed this. The total demand from the petroleum sector in 2008 was equivalent to 17 percent of GDP Mainland. Demand from the petroleum sector includes more than real investments. Intermediate inputs have recently been of almost the same size as fixed investments in the petroleum industry. Hence, it is important to include intermediate inputs when analysing the sector's importance for the Norwegian economy. Supplies for the petroleum industry involve many Norwegian industries. The manufacturing industries are far from being  More>>
Publication Date:
Mar 15, 2010
Product Type:
Technical Report
Report Number:
SSB-R-2010-8
Resource Relation:
Other Information: Numerical Data
Subject:
02 PETROLEUM; STATISTICAL DATA; PETROLEUM INDUSTRY; FINANCIAL INCENTIVES; LIFE-CYCLE COST; ECONOMIC POLICY; ENERGY POLICY; GOVERNMENT POLICIES; PRICING REGULATIONS; ECONOMIC DEVELOPMENT; ECONOMICS; NORWAY
OSTI ID:
1009194
Research Organizations:
Statistisk Sentralbyraa. Oslo (Norway)
Country of Origin:
Norway
Language:
Norwegian
Other Identifying Numbers:
Other: ISSN 0806-2056; TRN: NO1105077
Availability:
Available at: http://www.ssb.no/emner/10/06/20/rapp_201008/rapp_201008.pdf
Submitting Site:
NW
Size:
58 p. pages
Announcement Date:
Mar 21, 2011

Technical Report:

Citation Formats

Eika, Torbjoern, Prestmo, Joakim, and Tveter, Eivind. The ripple effect of the petroleum industry. Which industries deliver?; Ringvirkninger av petroleumsvirksomheten. Hvilke naeringer leverer?. Norway: N. p., 2010. Web.
Eika, Torbjoern, Prestmo, Joakim, & Tveter, Eivind. The ripple effect of the petroleum industry. Which industries deliver?; Ringvirkninger av petroleumsvirksomheten. Hvilke naeringer leverer?. Norway.
Eika, Torbjoern, Prestmo, Joakim, and Tveter, Eivind. 2010. "The ripple effect of the petroleum industry. Which industries deliver?; Ringvirkninger av petroleumsvirksomheten. Hvilke naeringer leverer?" Norway.
@misc{etde_1009194,
title = {The ripple effect of the petroleum industry. Which industries deliver?; Ringvirkninger av petroleumsvirksomheten. Hvilke naeringer leverer?}
author = {Eika, Torbjoern, Prestmo, Joakim, and Tveter, Eivind}
abstractNote = {Extracting petroleum has a much larger rate of return of factor inputs than other industries. The 'excess' return is called the resource rent, which has brought significant revenues to the Norwegian government. Increased revenues have made it possible to conduct a much more offensive counter-cyclical fiscal policy through the current and past slumps, and the policy of spending the real return of accumulated rents have been important for our materiel welfare. Demand from the petroleum sector has also generated important impulses to the Norwegian economy. At the beginning of the oil age, 40 years ago, those impulses were of less importance. But a conscious policy to increase Norwegian firms' expertise together with the increase in demand from the petroleum sector has changed this. The total demand from the petroleum sector in 2008 was equivalent to 17 percent of GDP Mainland. Demand from the petroleum sector includes more than real investments. Intermediate inputs have recently been of almost the same size as fixed investments in the petroleum industry. Hence, it is important to include intermediate inputs when analysing the sector's importance for the Norwegian economy. Supplies for the petroleum industry involve many Norwegian industries. The manufacturing industries are far from being the only primary supplier. After adjusting for the indirect supplies, we find that most industries are represented as a supplier to the petroleum industry. Direct supplies of intermediate inputs from manufacturing industries accounted to 27 percent of the total supplies in 2006. Equivalent figures for investments were 20 percent. When adjusting for intermediate inputs from other industries - direct and indirect supplies - we find that the supplies of intermediate inputs from manufacturing were only 12 percent, and 11 percent for investments. Mainland based services supplied 27 percent of the investments and 32 percent of the intermediate inputs when correcting for indirect supplies. The import share related to the use of resources in the petroleum sector has been significantly reduced since the first years of oil production. The import share has also been falling through the last 10 years, but not with the same amount as it did in the 1970-ties. We find that 42 percent of the petroleum investments were imported when adjusting for indirect imports. For intermediate inputs this figure is lower. The fact that the import share has declined implies, given other aspects equal, that the demand from the petroleum sector has increased its impact on the Norwegian economy. The demand from the petroleum sector stimulates the Norwegian economy through other channels in addition to those described above. To meet an increase in the demand of intermediate inputs from the petroleum sector, in order to expand its production businesses have to increase its employment and expand its real capital. Thus real investments increase and unemployment rate falls. As a result of lower unemployment rate is higher salaries and thus a larger households' real income. Through these channels the petroleum sector affects household's demand for goods and services. On the other side, these effects will worsen the cost competitiveness for the exposed industries, by lowering Norwegian exports and increasing import shares. (Author)}
place = {Norway}
year = {2010}
month = {Mar}
}