“Norway is a petrostate with a sovereign wealth fund, and it has sensibly decided that that sovereign wealth fund will do a better job of diversifying the country's wealth away from oil if it does not also buy oil stocks. Norway has plenty of oil! “

https://www.bloomberg.com/view/articles/2017-11-17/absent-re...

But on the other hand, if you wanted to divest from oil with the expectation that oil will become a non-essential resource, you wouldn't go around proclaiming it loudly. I had the same thought when I first heard the announcement; this is going to be interpreted as more than a diversification move, and I'm not certain that it _is_ purely a diversification move.

Saudi Arabia is doing the same thing by listing Saudi Aramco on the stock exchange. If oil will eventually become a (relatively) niche resource, the market value derived from non-extracted resources will tank, and divesting needs to happen now, before everyone realizes what's going on. To do this without triggering the very thing you are hedging against, you need to have plausible deniability, which Norway does.

Historically, oil has gone gangbusters. I doubt any of the sovereign wealth funds lost money buying oil stocks. Yet, within a decade, we've seen a few of them announce that they're going to diversify. Ostensibly, this is a move to stabilize their long-term value against market fluctuations, but given the criticality of energy and how well historically these companies have done, it seems more likely that they're worried about a major market shift on the 30-50 year horizon and are looking to reposition themselves ahead of when the market itself moves.

So to me, it looks like major oil producers are preparing to leave oil, when viewed through a generational lens -- the wealth funds are clearing out, educational training programs are shifting, etc.

In 10-15 years, the flow of new workers will hit whatever low-level long-term carrying will be; in 30-40 years, oil will have settled into some kind of "post primary energy" role. (It's not like petrol products are suddenly not useful; just the bulk of traffic will shift, and so there won't be enough business to support several nations.)

Of course, 2050-2060 was when people were guessing that was going to happen for quite a while. But this seems like a sign we're on track for that, broadly speaking.

The important development in this decade is that we have turned some corners in technology, primarily electrical cars with sensible mass-market economics, so a significantly less oil-dense energy economy is now a mainstream projection using fairly orthodox assumptions - electricity is primarily produced from coal and natural gas, rarely oil. Previously, predicting the end of oil was more in doomsday/crackpot conspiracy territory.

Also, in this same decade, fracking came of age. Where previously the endgame for oil was holding the world hostage at ever rising prices, we now know that there is a substantial supply at $80-100, effectively capping the price there, making the endgame a lot shorter and much less profitable.

Oil will be around basically forever, but play a diminishing part.

Particularly if you're an oil exporter.

Hedging makes sense. The funds primary source of growth is oil and oil prices, the outside money. Why carry the same risk in the portfolio itself?

See e.g. the dot-com bubble and how people who worked in IT and had invested their money mainly in IT were screwed, whereas it wasn't so bad if you just got fired and say invested in an S&P 500 index fund.

But yes, investing only in your employer is a particularly bad version of that.

Haha when I worked for Lucent long ago they actually had a program set up exactly for that, so my more foolish colleagues received vastly-overpriced stock in place of some percentage of their salary. Thinking back, the managers must have had some kind of incentive because they hyped it in unseemly fashion.

No need to keep it there if you just want to take your gains and walk.

[1] https://thefinancebuff.com/employee-stock-purchase-plan-espp...

That said: yes, they're usually a very good value for employees as long as you sell immediately and diversify the proceeds.

It's interesting that these schemes aren't viewed in the same light as e.g. credit card incentives. Getting 0% interest for the first 6 months is a deal good enough to put the credit card bank out of business, but somehow enough credit card borrowers are getting screwed to pay for the incentive overall. TANSTAAFL. Why is that harder to recognize in some circumstances? Is it a class thing? Anyone can get a credit card, while only high-quality people like ourselves can get a job at Acme Inc?

Anyway credit card companies might be evil, but they receive enough scrutiny to be extremely lawful in their evil. (If you actually pay off the debt they won't forget about your payment.) Can we really make the same statement about employers, in general? One might have a standing order to sell these shares at regular intervals, but one has seen enough HR shenanigans by this point to realize that they DGAF about employee interests... "Oh gosh we're sorry that got changed at the beginning of the year and we didn't tell you about it for 9 months while you lost all the money you've ever made in this program! Our recent stock slump has been difficult for everyone! There's nothing we can do about it now! I guess you should have been mildly disciplined..."

ESPP is only for publicly traded companies, and when the purchase goes through, you get shares at a discount on the more advantageous of the starting and ending stock prices.

HR has no power to prevent you from selling that stock, it’s held in a stock account over which you have full control and HR has none.

Ref: Enron.

The winning move is not to play.

Implies exactly that. If it had nothing to do with activism then 1) activism effort to influence investments failed and 2) this lends no momentum to the movement as it was a coincidence and could be changed tomorrow regardless of environmental impact.

The only way this is positive news for EA is if they spin and misrepresent it as is done here.

Oil may or may not have a bright near to mid term financial future, but Norway's move is either virtue signaling at the national level or diversification of a portfolio that's too heavily invested in that sector. In itself it won't change the oil market one iota.

I also believe that as EVs grow to 5%, 10%, 20% of the global sales for cars, Norway will increase its "hedging" over the next few years, which will show some direct correlation between EVs and Norway's decision to hedge its oil stock risk.

So the total "negative exposure" towards EVs if all cars everywhere become electric is <30%.

Furthermore, the retail sales of gasoline and diesel fuel has not yet shown any decline in Norway [1], despite EV-subsidising policies being in effect for a decade. So decreased fuel sales volume has a many-year (perhaps even decade) long lag behind increased EV sales. (The average Norwegian car is 17 years when it is scrapped.)

[1] https://www.ssb.no/en/energi-og-industri/statistikker/petrol... - petroleum product sales statistics, English description, you can export to csv file.

If oil price drops too far you coild imagine gasoline and diesel generators taking over for gas :p or at least NLG taking a hit... the energy market is coupled.

Odd. The stats you point to say otherwise. Says motor gasoline is down (1.9%) and diesel is up (4.7%) – so it's kind of a wash.

More interestingly (in the context of this news of divestment) the total figures are down year on year on year

(in 1000 litres units)

    2012    9 635 521
    2013    9 279 405
    2014    8 995 567
    2015    8 827 093
    2016    8 790 684

Until the Norway experiment one could not know how much people care about using a fundamentally different car technology.

It shows that with likelyhood as EV prices drop sales will take off elsewhere.

But because of the harsh climate, Fenno-Scandinavians are already used to plug their car when they park it at home or at work (to warm up the engine and the interior in wintertime). Less change, an habit of seeing plugs a bit everywhere and the knowledge that it is not so much of a practical, legal, financial problem to have such a network installed, so less reluctance to switch, compared to inhabitants of southern Europe who imagine, rightly or wrongly, major obstacles to overcome for everyday use.

So your stats have to be viewed through a heavy prism: it's not a customer trend as much as a government push.

Also, a proposal has recently been made for a tax on heavy electrics (Tesla's). It will add $11687 to the purchase price of a Tesla X, before the now exempted VAT is added.

Road tolls for PEVs will be increased to half of ICE vehicles'.

Electric cars would not sell anywhere near as good if they weren't exempt from taxes and cost twice as much as they do now.

In other words, when you take away the implicit subsidies for the unpriced carbon, electric cars become cost-competitive?

(In Norway, the electric grid is primarily renewable/hydro based[1]... yes, I realize this argument is different for countries with different electrical makeups)

[1]: https://en.wikipedia.org/wiki/Electricity_sector_in_Norway

It's not like they're cheap, but the fees are insanely high for ICE cars in Norway.

Example: A BMW M550i is from what I can see $73,400 in the US and $135,300 in Norway. That's 82 percent more. The difference is way smaller for electric cars.

Come Tesla, and suddenly all the rich people in Oslo wanted one so they could bypass the commuters by driving in the bus lanes.

The rest of the nation is still very much an ICE nation. When you have to drive a half hour or more to do certain types of shopping when you live outside the cities, they are pretty much required.

On a more flatter terrain around Oslo the car could go around 150km. This is more than enough for any kind of shopping. The newer eGolf almost doubles the range making it absolutely non-issue if one gets car today.

The real reason is why electrical car has not been popular with less wealthy people is that cars in Norway are heavily taxed making one a heavy investment that one sticks to and people here are rather conservative. But attitude is changing.

Pretty much Bloomberg's modus operandi when it comes to their select few pet projects.