Whale Oil Lessons Applied To Fossil Fuel Switch (EP.87)

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Summary

The successful, market-driven transition from using whale oil for lighting and lubrication, as well as to make soaps and margarine, can, pun intended, light the way for us today as we deal with transitioning from carbon-based energy to hydrogen-based energy.

For the next 10 minutes, we will unpack these invaluable lessons from history, and apply them to today’s energy transition issues.

Transcript

The successful, market-driven transition from using whale oil for lighting and lubrication, as well as to make soaps and margarine, can, pun intended, light the way for us today as we deal with transitioning from carbon-based energy to hydrogen-based energy.

For the next 10 minutes, we will unpack these invaluable lessons from history, and apply them to today’s energy transition issues.

Pause for definitions: By carbon-based energy, I mean anything that is carbon-based that is used for energy; that one is simple. By hydrogen-based, I mean everything from energy related to that big ball of burning hydrogen in the sky, e.g., wind, tidal and solar, to fuel cells.

As whale oil became more popular, peaking in the mid 1800’s, it became abundantly clear that the dwindling whale population would soon mean that the oil from these animals would quickly become harder to come by, and become much more expensive. It was not an environmental issue, i.e., protecting the various species of whales, that drove the change to another technology; it was simply supply and demand.  

John D. Rockefeller, the first billionaire and arguably the richest man who ever lived, started modestly and with a focus on making good, cheap kerosene available. He saw what was happening to the economics of the whale oil industry and came up with a better alternative: kerosene. Note there was no “bubber tax” on whale oil to discourage use, nor was there a federal tax credit for using kerosene. In fact, the government did what it often does best–nothing. The “bonus with purchase” from the development of kerosene was gas, initially simply a byproduct of the kerosene distillation process. And without gas, even Henry Ford could not have revolutionized transportation with the Model T. Once again, government did its part by doing nothing. In exactly the same way, the transition from the horse to the automobile did not require a government tax on horses or a tax credit for buying cars; new technologies, driven by innovation and supply and demand, did the job quite well.

Over and over again, we have seen market driven technologies that have changed our world, and changed it dramatically for the better. Here are just a few examples:
1. Farming technology has allowed the same amount land to feed dramatically more people. 2. Sea transportation has changed from human power to sail to huge crafts driven by massive oil and nuclear powered engines. 3. We went from the Wright Brothers to the Concorde supersonic passenger jet in just over 70 years. 4. In what seems like the blink of an eye, we went from adding machines and typewriters to having powerful computers in everyone’s hands. 5. Every smartphone has more computing power than in all of the National Aeronautics and Space Administration had when NASA put a man on the moon.

Why would anyone think that American and world-wide ingenuity and entrepreneurial spirit will not come up with a powerful and effective transition from carbon-based fuels to hydrogen-based fuels? More importantly, perhaps most importantly, solutions derived this way, derived from markets not governments, will be solutions that consumers–you and I–will be willing to pay for because we want them. Market-based solutions represent things that we want, at an affordable price. That’s what drives successful new products and services–and creates successful economies.

Here is another opportunity to earn $100 from me, your humble podcast host: Name a planned economy, you know, one that depends on government action like taxes on things it wants to discourage and incentives on things it wants to promote, that has ever succeeded over time. Just one example will get you the cash.

And for free, I will give you one telling example of exactly how that kind of government meddling leads to economic and lifestyle disasters.

Post WWII, Germany was divided in two: West Germany was a Western-style, capitalist economy; East Germany was a Soviet-style, planned economy. West Germany prospered, and East Germany suffered. These two countries were the same people from the same nation, with the same history and speaking the same language. The only variable was how the government dealt with the economy, including technology, innovations and manufacturing. As part of the resurgent West German economy were auto manufacturers like VW, Mercedes, Audi and Porsche. East Germany made only the Trabant, clearly the worst mass-produced car in history. It was smelly, slow, had a poor ride and was expensive. If that was not enough, the wait for a new one was six months or longer–if you could afford it.

When the two Germanys were reunited in 1990, it cost the West German taxpayers about $1T (trillion) dollars and many years to repair the damage that the planned economy approach did to East German families and to East Germany overall. And meddling in an economy by propping up products and services that people don’t want to buy with tax incentives, and taxing things that people do want to buy as a way of discouraging sales, is an essential part of any planned economy.

The American market economy has already produced a massive switch from coal to natural gas, reducing emissions in those instances by half. Other technologies have helped to reduce our carbon emissions to 1976 levels–when we had 100M more people. The same innovative and entrepreneurial spirit that has created stunning advances in computers, transportation, medicine and almost all other areas in our lives, will continue to make the needed advances in climate change-related technologies. Let’s not add government controls to market-based processes; let’s allow for the Mercedes and VW type solutions to our changing energy needs, and not the Trabant solution.

Random note: It is Winter here in Colorado Springs. I hear so many people say things like, “I like Summer better. Wish it was Summer now.” I like to think that I embrace all of the seasons, enjoying the one I am in at the moment, and am ready to enjoy the one that is coming up. I get part of that right. For example, I am enjoying this cold, clear day, and the light snow that covers almost everything. I need to stop being fussy with things like the inevitable sloppy roads that cover my car with caked road mud. And I really need to relax when the car in front of me is doing 5 mph in a 40 mph zone because the elderly driver is nervous about driving on patches of snow and ice. Or when the driver behind me is doing 65 mph on the same road in the same conditions because he does not realize the danger to both of us.

Join with me in using what we know how to do–what we know we must do–to everyone’s advantage. Let’s practice thinking well of others as we seek common goals, research the facts that apply to those goals, and use non agenda-based reasoning to achieve those goals together. That process applies to climate change issues as well as all the other issues we face. Let’s demand that our politicians and other leaders do both as well. Imagine for a moment that all of us, including our politicians and other leaders, practiced this part of what we believe at Results With Reason. Let’s picture that world together, and think about how to make it happen. Remember, Revolution 2.0™ is coming. Please stand by…

Links and References

Fuel Cells
Trabant
Socialism Works

Contact

As we get ready to wrap up, please do reach out with comments or questions about this podcast or anything that comes to mind.  You can email me at will@resultswithreason.com, or connect with me on Twitter, Facebook, and LinkedIn. And you can subscribe to the podcast on your favorite device through Apple Podcasts, Google, or Stitcher.

Now it is time for our usual parting thought. It is not enough to be informed. It is not enough to be a well informed voter. We need to act.  And if we, you and I, don’t do something, then the others who are doing something, will continue to run the show.

Remember: Knowledge by itself is like running a winning race, then stopping voluntarily before the finish line.

Will Luden, writing to you from my home office at 7,200’ in Colorado Springs.

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Will Luden

I am your host, Will Luden, former long-time high-tech CEO and Board Chair. I had no idea when I started this podcast that it would become the highest calling of my professional career. Lincoln famously hoped that a government, “…of the people, by the people and for the people…”, would not perish from this earth. My hope, the reason for Revolution 2.0 ”A Booster Shot”, is that a government based on common goals, achieved by applying non agenda-based reasoning to core facts, will allow us to continue to build on our mutual inheritance of a legacy of dedication to seemingly impossible ideals, a legacy that also includes a history of achieving them.
Will Luden
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4 Responses

  1. James C Kuhn Reply

    Thanks for putting this issue out there so clearly. Sadly, there are far too many people in positions of influence that don’t agree with a market based, non-governmental approach and it seems like an uphill climb to get them to change their minds. I guess we have to reach a point where fossil fuel shortage is real (like the whale oil shortage) and not dictated before the majority decide to take a different road. As it is, those with an agenda set short-term unrealistic goals to change people’s behavior–as you said, it never works that way.

  2. James Kuhn Reply

    I’m with you, Will.

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