20.5. The Oil Economy

[Music] American capitalism, a history with Lewis Heimann and Edward Baptist. [Music] So one way to think about the history of all the change that's happened over the last 200 years on the planet Earth is to think of it as a transformation of the way in which human beings get and use energy. Human societies, prior to 1800 and really prior to 1850, used energy just from a few sources. They burned wood as fuel. They sometimes used wind to move boats or turn windmills or things like that. And they also used animal and human power to pull things to cut things down and so on and so forth. After 1850, in particular, as coal becomes more and more widely used, what's happening is that human societies are digging up energy stored millions of years ago and turning it into forces that transform the entire economy and the entire world around them. Coal, of course, will be succeeded by oil and this will change human history once again because we have one kind of industrial revolution with coal. We have a different kind of industrial revolution with oil. We have one kind of society with coal. We have a different kind of society with oil and not just a different kind of society and a different kind of economy but different kinds of foreign policy, different kinds of internal politics and maybe a different kind of future as well. Just to state as clearly as possible, the historical difference between how coal and oil structure society differently. We could just put it like this. Coal concentrates oil disperses. If you want to move things with coal, it turns out or at least as to how human societies develop after 1850, you can move it along tracks and the case of a train. You need a lot of coal to do this and you can only move things where the train tracks go. But oil is much more successful as a fuel for smaller vehicles, for more versatile vehicles. And so with coal, you get the train, with oil, you get cars, you get trucks and you get a much more dispersed and flexible transportation system. Oil also is more efficient per unit of weight and volume in producing energy and is easier in certain ways to move and that has some interesting effects as well. Just to give you one example. If you build a naval fleet that's powered by coal, you need to have cooling stations all around the world. This is the quandary that the British Empire found itself in around 1900. It had a fleet powered by coal and it needed to maintain these stations around the world. And that helps to drive its policy of trying to hold on as much of the empire as possible. With oil powered ships, however, you don't need that same kind of network of stations. You need other things as well, which we'll talk about in just a second. But oil in general gives more flexibility to the economies of the great powers of the world. We would see this very clearly in the way that oil drives U.S. economy in the 20th century and particularly after World War II. Of course, throughout the history of human beings' use of petroleum, what we find is a continual search to find more sources of it. The U.S. was the world's greatest producer and consumer of petroleum by early in the 20th century. But already, U.S. authorities and U.S. companies are looking for new sources overseas and trying to make links that will ensure a steady flow of petroleum back to an economy that is increasingly dependent on the automobile. Now, Britain already had a powerful presence by the early 20th century in the Middle East. And to a large extent, the history of the next 50 years or so after 1900 in the Middle East is the history of the United States making inroads into that British hegemony. In particular, in building an alliance with the kings of the new state of Saudi Arabia between the 1920s and the 1940s. And that alliance would sustain the American internal combustion economy after World War II despite all the ups and downs of domestic production and all the other ups and downs of world production that would also affect the U.S. economy over those years. So at the end of World War II, not only does the U.S. dominate the world economy, not only does it dominate world industrial production, it also controls the bulk of the world's supply of petroleum and look what it does with that supply after World War II. It continues to prosper because of the world's largest automobile industry and more Americans own cars than ever before and perhaps more than ever since by some measures. The U.S. converts fully to an internal combustion-focused transportation system. It builds a massive interstate network of superhighways that essentially replaces train travel as a mode of in-state and out-of-state travel. It produces a whole host of new products. Many of them generated in the research machine of that industry higher education symbiosis produces this whole host of products from petroleum, all kinds of plastics, fertilizers, industrial solvents, all kinds of things that you could never imagine would be generated from petroleum are generated from petroleum in those years and they become important parts of American industry and of American everyday life. The abundance of oil and the abundance of energy in the post-war United States economy has other profound effects as well. If you look at the development of the South after World War II, one thing is inescapably clear. Even before you had desegregation, another impediment that was holding back the economic development of the South was removed by this abundant energy and that is the pervasive ways in which heat and humidity discouraged immigrants and migrants, internal migrants from moving to the South, discouraged investment, discouraged industry from expanding in the South. The invention of air conditioning of course depends on this abundant supply of cheap energy and abundant supply that ultimately is generated out of the ground from oil. Air conditioning transforms the South as much as any other single development since the Civil War. Without it, it's impossible to imagine the vast shift of industry, of business, of northerners and Midwesterners into the South and later into the Southwest into states like Arizona and so on that you see after 1950 and that will completely transform the American economy. It's also the case that without air conditioning, my colleague Lewis would be lost. He would have died of dehydration long ago. He would have never been able to grow to the tender age of 18 when he was able to leave for more northern climbs. For more information go to edex.org and look for American capitalism, a history with Lewis Hyman and Edward Baptist. Or go to facebook.com/Americancapitalismook. This podcast is brought to you by Cornell X from Cornell University.