Mr. Svein Gjedrem:

I thank the Deputy for those questions. In regard to the background for establishing the fund, the discussion on that started in the early 1980s as I mentioned. It took some time. Actually back in the early 1970s a clear policy was defined for dealing with the oil money but the fact was that in the 1970s and early 1980s it was very difficult to follow those recommendations from economists and others. There was a lot of optimism established in the early 1970s. The community overall and the political community saw a possibility to build up the welfare state quite fast in the 1970s. We actually ended up with quite a lot of instability in our economy with high inflation as in many other countries but even higher. During the 1980s we had instability. Some members may remember, or perhaps they are too young for that, but oil prices increased greatly in 1973 and 1974 and again in 1979 and 1980. That created a lot of optimism in Norwegian society. However, then there was a huge decline in oil prices in 1986.

We learned a lesson the hard way. We did not start well when dealing with the highly fluctuating oil income. It was only in the 1990s that we got the house in order and had a clear understanding of the need to manage the oil fund in a better way as it developed.