The first oil crisis
Given the high cost of oil, it seems that the world is coming to the end of the era of cheap oil. There is still a lot of oil left in the world but it is going to be more expensive to get it.
This is the world’s second oil crisis. We have been through such energy transitions before. Peter Tertzakian has written “A Thousand Barrels a Second: The Coming Oil Break and the Challenges Facing an Energy Dependent World” (Sydney: McGraw-Hill, 2006).
The first oil era was based on whaling. The current dispute in Australian Antarctic waters involving Japanese whaling is a direct descendant of that first era.
The world’s first oil rush began in 1751 in Newport, Rhode Island. Merchant Jacob Rodriguez Rivera purchased a waxy substance found only in the head of the sperm whale – spermaceti.
He was a local candle maker and he wondered whether this substance would be suitable for candles. His experiment was a turning point in world history – not least for whales.
For thousands of years, candles were the means by which humans lit up the world. That made tallow - the grease or fat of animals used in making candles - one of the most important early fuels.
Candle making was an important activity. People needed light at night or to get into dark cupboards during the rest of the time. Without adequate light at night they had little choice but to go to bed early.
Rivera’s candles created a new era. They burnt with a clear bright light and produced a nice sweet smell. The strength of the bright white light of the spermaceti candle would become the standard by which we would measure the quality and intensity of a light well into the age of electric light globe.
The growing demand for spermaceti candles triggered improvements in whaling technology. For the first time, whales were processed on board. Dead whales being brought back to the coast would decay and so boiling the blubber onboard meant that the ships could stay at sea longer, thereby catching and processing even more whales. Sperm whale oil had a restorative quality and so the oil that fell on the ship’s decks helped improve the ship’s working life.
The whale oil rush peaked around 1847. The price of whale oil was now very high because the herds had become depleted. In Herman Melville’s “Moby Dick” novel there is a note of regret that the whale resource, that had once seemed so abundant, could no longer be found easily.
Just in time, in 1849, Abraham Gesner, a Canadian geologist, distilled bituminous tar to produce coal oil. He called it “kerosene”. It was just as efficient as whale oil and it was much cheaper.
Merchant John D Rockefeller began to sell kerosene for lighting. He called his new company Standard Oil as a way of reassuring customers that the new fuel met the same standard that they had been used to with whale oil.
A new oil rush got underway. In 1859 Colonel E L Drake took the idea of the derrick used to bore for salt and adopted it to drill for oil. At 70 feet beneath the surface of Pennsylvania, north-eastern United States, he hit an oil deposit.
The oil bubbled to the surface. Some of the unemployed whalers now joined the new form of employment in drilling for oil. A new oil era had got underway – just in time.
Keith Suter, Consultant for Social Policy
Broadcast 14 March 2008 on Radio 2GB's "Brian Wilshire Programme" at 9pm.