Could this start an oil shortage?

BEIRUT, Lebanon (Reuters) - Most of the Middle East's Arab states are ill-prepared for the millennium bug, which could hit the region's oil industry and cut off fresh water supplies, a U.N. official said Friday.

"If things break down, then the action taken is usually spur-of-the moment, unorganized and takes time. But if this happens in certain fields, the results could be catastrophic."

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-- Mark Mastrorilli (mastrorilli@hotmail.com), March 01, 1999

Answers

I thought the same when I read this:

FEBRUARY 28, 14:53 EST

Oil Glut Costing Norway Jobs

By DOUG MELLGREN Associated Press Writer

OSLO, Norway (AP)  A lingering glut on the world petroleum market has Norwegians bracing for a problem they had nearly forgotten after years of prospering on oil wealth: unemployment

Some fear the slump could cost 30,000 jobs in the national oil and shipyard industries. That would be a staggering blow to a country where an average of just 56,000 people  2.4 percent of the work force  were without jobs last year.

On Friday, the government summoned representatives of the oil industry to see what could be done. Easing heavy taxes on oil was seen as possibility, although no decisions were made.

``There is a willingness to pull together,'' said Oil Minister Marit Arnstad after the meeting. ``The industry itself is willing to make an effort, which it will have to do. The unions are willing to discuss things with industry, which they will have to do. And we from the government are open to considering measures, which we also have to do.''

Norway is the world's second largest oil exporter, pumping about 3 million barrels a day. With just 4.4 million people, the country has had more money than it could spend. The government has been salting away the surplus in a national Petroleum Fund that now has $22 billion as a cushion against the day oil production declines.

But oil prices are now below the $12 per barrel it costs for exploration and production.

Gunnar Berge, head of the state petroleum directorate, last week said a sense of panic seemed to be spreading throughout the national oil industry.

Berge's comments came during what Norwegians are now calling ``Hell Week.'' The country's three oil companies, state-owned Statoil, state-controlled Norsk Hydro and private Saga Petroleum, all announced poor profits and plans to lay off as many 3,500 people.

A slump for oil companies can easily spread to other concerns that provide engineering services, supplies or build oil platforms. Aker Maritime  a major offshore supplier  last week said it may have to lay off 2,000 people.

``The effects of low oil prices on Norwegian society are serious,'' said Deputy Oil Minister Erlend Grimstad. ``But I don't agree that there is a panic by the oil companies or the government.''

On Thursday, the state labor directorate revised its unemployment projections for 1999, saying that the jobless rate would increase by 15,000 people to 3.1 percent by the end of the year.

That may be conservative. The Norwegian news agency NTB checked with virtually all oil-related concerns, which now employ 110,000 people, and counted as many as 30,000 jobs that could disappear this year.

Until now, the problem in Norway's labor market seemed to be finding enough people to fill all the jobs. Unemployment was so low last year that labor unions were able squeeze a more than 6 percent average pay raise out of employers. The six-year boom was getting so hot last year that experts and the government feared the economy was set to overheat.

But there was also good news for Norway in its misery of low oil prices, according a report from the Organization for Economic Cooperation and Development last week.

It said a tight 1999 budget adopted by the government, reduced spending by industry, if combined with moderate wage increases this year, could allow the Norwegian economy to cool off without nose-diving into a slump.

Svein Gjedrem, governor of the state central Bank of Norway, warned the government to resist the temptation to spend too much of its oil wealth to stimulate the economy and create jobs.

``Pursuing such a policy  assuming that the oil price remains low  would have a major impact on the government's ability to finance the welfare state. He said at current oil prices, an increase in government spending of just one-half of a percent of gross national product per year would have Norway running a budget deficit in 10 years.

``The petroleum fund would suffer a sad fate and be depleted in 18 years,'' he said.

-- lowprofile (more@stuff.com), March 01, 1999.

http://www.gold-eagle.com/editorials_98/madhok081898.html - more on Arabs and y2k

-- Mitchell Barnes (spanda@inreach.com), March 01, 1999.