The 13 Dollar Big Mac: Norway’s Oil Wealth and the Cost of Living

My wallet took a bit of a bruising on a recent trip to Oslo, causing me to take a more than casual interest in just how expensive Norway is.

Taking a notepad out, I jotted down a few prices. A McDonald’s Big Mac meal sets you back nearly $13, a ticket to the cinema $15, a beer $10, and a café latte $5 (prices converted from Norwegian kroner). All in all, that can make for a fairly expensive evening out. And that’s without going to a nice restaurant or cracking open a bottle of wine.

I only spent three nights in downtown Oslo; I couldn’t afford to stay much longer. But Norway’s oil-fueled wealth has ushered in droves of foreign workers trying to get a piece of the pie. On my first evening out, I discovered that my waiter hailed from Gothenburg, on the west coast of Sweden. “I come here in the summer to work in the restaurants,” he tells me. “Back in Sweden, I earn 107 Swedish kronor [$14] per hour, but here I earn about 60 percent more. And I stock up on all my food over the border in Sweden once a week.”

Swedes used to see the Norwegians as their poor country cousins, that is, until they discovered oil in the 1970s. Now Norway is flush with money and the Swedes, by a twist of fate, are the ones waiting on their tables.

But while workers have flocked to Norway like some modern-day gold rush, the traffic is not all one way as Norwegians venture over the border to Sweden to take advantage of comparatively cheaper prices for food and alcohol. Last week I went down to my local supermarket here in northern Sweden for groceries, only to find that many of the shelves had been emptied as if a horde of locusts had just passed through. “The Norwegians have just been,” the woman working at the counter told me.

Why is it so expensive in Norway? One reason lies in the booming oil industry with the strong Norwegian krone: foreign currencies simply get less bang for the buck. Salaries are also much higher in Norway than in other countries, with the average worker making about 400,000 kroner a year ($64,000). A high standard of living equates to high prices for almost everything; it’s a country where your average Norwegian bartender has to be persuaded to keep pulling pints rather than going into a more profitable trade.

It’s somewhat disappointing to find, then, that the streets of Oslo aren’t exactly paved with gold. In fact, there are a surprising number of beggars on the streets and a mounting drug problem that can make walking through the city at night an unattractive proposition. Still, it’s an affluent place by any standards, though not the most expensive. According to Mercer’s 2009 cost of living survey, Moscow, Tokyo, Hong Kong, and Copenhagen are all more expensive – especially in regard to housing. New York came 8th in the same survey, ahead of Oslo, which was ranked 14th this year, ten places lower than in 2008.

While the Norwegian government could probably afford to line the capital’s streets with gold, it is sensibly holding part of its oil wealth back for a rainy day in a state oil fund worth over $300 billion – and that’s taking into account having lost a large chunk of its fund during the present global financial crisis.

Not surprisingly, there is debate in Norway whether those funds should be allocated in the state budget and not horded away for the future. While the sum is less than the annual U.S. defense budget, it’s a sobering thought that in a country of just four-and-a-half million inhabitants that equates to nearly $70,000 for every single person in Norway.

Leaving Oslo, I can’t help but ask a Norwegian why it’s so expensive, hoping for at least some empathy. “It’s expensive for foreigners, not for us” is the curt reply, as if he’s bored of such questions from tourists. I promptly pack my bags and ponder a career shift as a deep sea diver on an oil rig in the North Sea.

Photo by Jeaneeem