January 28, 2005

A Parable for the Peak of Oil

A case study for the end of cheap supplies of a once valuable historical resource (2 of 3)

Before I get into more details about the replacements for oil, I will consider the example of the whale oil crisis in the middle of the 19th century This example is not novel. Other cases of peaking resources are wood in 18th century England, ivory from elephants, and precious metals in a mining boom town. And then there’s that problem with case studies – You can usually find at least one case study to “prove” your point, whatever it is. That is what I’ve considered some of Freud’s stranger ideas about sexual repression. I.e. He found a couple case studies and extrapolated his own sexual dysfunction into a general theory. Of course, you could consider this digression on sexual repression a proof in point. But then again, perhaps I recalled that Freud used six case studies in one of his books. So, don’t take this case study as proof that the peak of oil will be easy. Instead view it as an simplified example of what I believe will happen when oil peaks. For over three centuries, whales had been killed for many products, including lighting oil, at a large profit. By the 19th century, demand was so large whales were harvested as a nonrenewable resource (harvest much larger than reproduction) and talk of crisis was strong. As the price rose and technology developed, the lighting service of whale oil was slowly replaced first by coal gas and later by oil. After some developments, these replacements became preferred and whale harvest became uneconomical. These technologies so completely replaced whale oil that I can’t imagine anyone harvesting whales for oil today. Although, supposedly spermaceti oil had some very good properties. I recall reading about resignation that such superb oil would no longer be available. Anyway, don't let that take away from my general point.

To paraphrase this story, an energy resource (whale oil) could no longer supply a demand (for lighting) cheaply. Other technologies (coal gas and oil) with larger reserves slowly replaced it. Eventually they made the original technology uneconomical and obsolete. Interestingly coal gas is an example of a technology that was replaced (by oil and electricity) before it became scarce.

The next entry(s?) in this series will consider the technologies that will most likely replace oil and a best case, realistic outcome to the peak of oil and how I think we will get there.

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