The worst drivers in the world... well, at least in Norway

Stavanger’s Aftenbladet published an article today alleging that drivers in Rogaland are among the worst in Norway. And here, after I just berated the media for over-sensationalizing, comes a sliver of truth from the press. (You can read the article in English via Google Translate here. An imperfect translation, but you get the gist.)

Words like aggressive and impatient and uninformed were bandied about based on interviews with sociologists, insurance specialists and various other 'in the know' folk. And, frankly, I can’t say that I disagree.

Normal mild-mannered and gentle Norwegians become lotharios behind the wheel. They throw themselves in front of you at high speeds, fail to use their indicators (and mirrors, natch), and they cut you off with little to no notice.

I’m not judging my adopted countrymen too harshly as I have a wreck or two or nine in my checkered past. But after I paid out the gross domestic product of Swaziland* on insurance deductibles I had a ‘come to Jesus’ moment with myself and tried to sort out my bad driving.

I have had several scrapes in Norway, primarily to do with roundabouts. It would appear that no one ever taught my lovely Norwegian compadres how they work, so I am taking this chance to lay out the rules once and for all. (Hopefully this will absolve my need to shout at my fellow drivers when they break the rules of rundkjøringen from now on.)

1. You yield to the person on your left. It is not true that he who enters first, wins.

2. You do not wait in a roundabout. If there is not room for you to pass through the roundabout to your onward road, do not, for the love of cookies, enter the roundabout. If you do, you will just jam it up for everyone else.

3. Use your blinker to indicate where you will be exiting the roundabout. Whipping into the roundabout and careening off an exit with no notice is a recipe for a crash.

I know there are a lot more rules, but if we could just nail those first three, I’d be pretty chuffed. I know you can do better than this, Rogaland!
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*This is hyperbole. I do not know what the GDP of Swaziland is. Nor do I intend to look it up. Feel free to post if you stumble across the info though, and we can all learn something.

The sky is falling... or so CNN would have us believe

It’s all kicking off in the media with doomsday reports that Shell, BP, ExxonMobil, and ConocoPhillips have all reported dramatic losses in their Q2 financials. Why does a blogging expat in Norway care about this? A few reasons – mainly because I love a good media frenzy. Also, Husband’s company is related to oil and gas services, so I like to pre-worry if Armageddon has arrived and the whole thing is going up in smoke. Another reason is that I am a professor in a business school, and they kind of like the faculty to at least pretend to understand these kinds of stories. Finally, I care because I live in an oil town and many of my expat friends are employed by the aforementioned companies, and I know that lower profits will translate in some way to expat contracts getting cut and me having one (or ten) less friends in town.

So I decided to do a little digging as that’s the kind of gal I am. Mind you, it was already established that I was rubbish at economics, but here’s my assessment of the situation.

Oil companies are reporting lower profits because the price of oil is declining.

Overly simplistic perhaps, but I did not see it mentioned in any of the articles I read. Famine, illiteracy, the impending resurrection, and Obama were all named culprits, but the simple fact that oil companies make money based on how much they can get for a barrel was painfully overlooked.

Have a look at the graph* below – it tracks Shell’s gross profit against the oil price**. (I use Shell as an example as I was too lazy to look at more than one company’s annual reports, but I suspect the trend is similar.)

See how the two trend together? So it should not be causing a media meltdown that Shell is down 70% in CCS (current cost of supplies) between Q2 09 and Q2 08. The media should actually be noting that these earnings are to be expected since we see the same trend in oil prices. But that’s not sexy enough. Frankly, if oil prices were trending down and Shell’s profits were trending up or staying the same, that would mean that an oil company is making money from something other than oil. Perhaps they invested in shares of Google back in the early days or have been quite judiciously investing their weekly allowance from dad.

The other issue is that 2008 was somewhat of an outlier in terms of profits, so we all got a little spoiled thinking the Golden Age would last forever. But Gatsby always dies at the end no matter how many times you read the book, and what we are seeing now is, for lack of a more astute phrase, a very sharp correction in the market.

Oil prices of $100 and more were not sustainable in the long run, and we saw those prices in part because 2008 saw a decline in the dollar, which is how oil commodities are priced. This decline in base currency meant OPEC had to raise oil prices in order to maintain existing profit margins. Throw in some unrest in major oil producing countries and increased demand from some larger national markets and you’ve got yourself an expensive barrel of black gold.

In fact, if you perform a trend analysis on gross profits in the same example used above, gross profit is still on a steady upswing.

I am not denying that we are in economic decline. However, I think this should be tempered with a little ‘big picture’ thinking and a recognition that these things are cyclical. So take a deep breath and resist the urge to run for the hills or sell out the portfolio. I don’t think we have to pawn the good china just yet. Perhaps someone should call CNN and let them know.
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*Apologies for the fuzzy graph. Frankly, I was pleased to get it from Excel into Blogger, so I'm not going to look a gift horse in the mouth.

**A few disclaimers about the graph. The numbers being thrown about in the media are CCS, but I used gross profit as this gives a little bit broader perspective. Second, the oil prices are annual averages adjusted for inflation, and Shell's gross profit is stated in millions. Third, Shell's gross profit for 2009 is simply GP for the first six months of 2009 multiplied by 2. This is most definitely not a FASB-approved accounting method, but, frankly, any other treatment required a lot of assumptions and even more math, and I have some West Wing to watch.

Ceteris Paribus

I wasn’t a great student of economics despite taking six classes at university. Economics and I knocked heads on many occasions, and I remember virtually nothing from my studies. I remember there were a lot of graphs, and anything requiring spatial awareness has never been my strong suit (as evidenced by the many dents on my car from thinking I was six inches further away or closer than I actually was).

One concept I do remember clearly is that of ceteris paribus, which is way of explaining a situation with one variable change but all other factors remaining the same. I don’t remember how this applied to economics, but the concept struck me then and now as a way of explaining how individuals respond to change and differing circumstances.

As an expatriate, moving to a new country is a huge shift in social, financial, and cultural circumstances. But transiting between home and host countries, whether for a holiday or in the permanent sense of repatriation, causes a shift in the individual, ceteris paribus.

When I visit the US, it is in many ways the same US I left. The US is ceteris paribus. I, however, am the changing variable. Every sojourn in a different place fundamentally changes a person, sometimes for the better and sometimes not. Taking this example the other way, when I moved to Norway, Norway was the same as it had always been. Me entering did not change the fundamental being of the country. But me entering did change the fundamental being of me.

I now hold opinions and ideologies I would have scoffed at ten years ago. But even without looking at my innate sense of values, my reaction to things has changed. When I first moved here, I remember thinking everything looked strange in terms of placement and architecture and aesthetics. Many things caused me pause, such as the fact I had to buy my alcohol at an open monopoly (Vinmonopolet is not just a clever brand – it’s all in the name, man). I thought the roads seemed narrow and so did the politics. I felt egalitarianism was a concept best left to theory but should never find a place in practice. Now, however, all of those things are part of my daily life, and I can’t remember ever feeling that they couldn’t or shouldn’t be.

I was reflecting on this as I have a great friend coming to visit from the US in a few months, and I wondered what her first impressions of Norway would be. I was racking my brain for the things I found odd when I first arrived, and although I can remember a few, nothing overly vivid springs to mind. Not because Norway has changed, but because I have. Norway is ceteris paribus, but I am not. This is the reason that people become accustomed and adapted to change. The situations remain the same, but our reflections on and experiences of them do not.

This notion is actually what makes humans so complex but so amazing. No matter our circumstances and no matter how much or often those circumstances change, we find a way to integrate ourselves and make it work. Now when I return to the US for a visit and feel frustrated and foreign, or when I return home to Norway and can’t remember the things that at first made me tear my hair out, I try to remember that I am the variable in the situation, not the place. You know, ceteris paribus.