The “Whale Oil Myth”

BY busadmin  August 20, 2008 at 7:03 PM EDT

This post is hopelessly long-winded, and not even prompted by a viewer question, but by a criticism I stumbled upon while scouring the Internet. As I searched for something economist Lester Lave had said about oil prices in one of our stories, I happened on a link entitled Whale Oil Myth. I caught the implication at once: Lave had mentioned whale oil scarcity in the mid-1800s as a catalyst for the modern petroleum industry, something I myself thought I’d learned long ago – a staple of my understanding, in fact.

Was it an urban legend? I was at sea. So I sailed to the Web site. Here is much of what was posted. (You can read the whole thing at the link above.)

Q: How many conservative economists does it take to change a light bulb?
A: None. The darkness will cause the light bulb to change by itself.

History is loaded with inaccuracies and myths, often used to lead [us] in one direction when, in fact, a more accurate account might provide a different lesson.
One recurrent and troublesome myth is that Pennsylvania oil arrived in the nick of time, around 1860, to replace a rapidly dwindling supply of whale oil. According to this myth, the “invisible hand” led the market to the Pennsylvania oil fields as if by magic.
What’s troubling about the “whale oil myth” is that it is so frequently trotted out when it comes to modern energy policy…

In April of 2008, distinguished Carnegie Mellon economist Lester Lave told the PBS NewsHour:

bq. “In the 19th century, we were using whale oil for lighting. It was the best way to get light at night. The problem was that there are only so many whales, and we had more people around. And so basically there just wasn’t enough whale oil. So what happened was that in Western Pennsylvania, they discovered oil.”

Of course, televised history almost has to be shallow. [HMMM.] But it should be said that the historical facts Lave presents here are quite incorrect, and so is the lesson that no government intervention was necessary at the time….[BOTH THESE STATEMENTS, YOU’LL SEE, ARE CONTESTABLE. BUT ON TO THEFACTS,” WHICH ARE ARGUABLY OF INTEREST ONLY TO FUEL FANATICS, AND THE DEFENSIVE AMONG US ACCUSED OF PROPAGATING MYTHS.]

The fact is that kerosene did not simply replace whale oil. In 1860, the government determined which technology would be the best way to get light at night. The oil industry was the favorite, and in effect, it was born with the competition swept neatly away and the silver spoon of subsidy lodged firmly in its teeth….

By 1850 a consumer had a choice of:

  • Camphene or “burning fluid” — 50 cents/gallon (combinations of alcohol, turpentine and camphor oil – bright, sweet smelling)
    * whale oil — $1.30 to $2.50/gallon
    * lard oil — 90 cents (low quality, smelly)
    * coal oil — 50 cents (sooty, smelly, low quality) (the original “kerosene”)
    * kerosene from petroleum — 60 cents (introduced in early 1860s)

The amount of camphene on the market was far above 90 million and probably close to 200 million gallons per year. That’s about the same level as kerosene in 1870. Whale oil peaked at 18 million gallons in 1845, according to Starbuck’s whaling history of 1878. [NEITHER AHAB’S FIRST MATE NOR THE COFFEE CHAIN, BTW, BUT A GUY NAMED ALEXANDER STARBUCK.] By all accounts, camphene was by far the leading lamp fuel.
In 1862, a tax of $2.00 a gallon was imposed on beverage alcohol and camphene was forced off the market. Since the Pennsylvania oil fields were in the process of opening, the whales really had nothing to do with the emergence of the kerosene industry.

Thus, kerosene came into an already well established liquid fuel system with full scale production, distribution and end-use technology already well in place. In other words, kerosene replaced an array of lamp fuels of various qualities and prices; it did not suddenly emerge to light up a world quickly going dark as the supply of whales ran out.

Now the author of all that was Bill Kovarik, a professor of communication at Radford University in southwestern Virginia.

I wrote Kovarik, thanking him, and got this in reply almost at once:

…Naturally, this takes nothing away from the main point of your story, which was that we are moving toward a greener Pittsburgh (and many other cities).

The bottom line of the whale oil myth is that change does not occur through market forces as often as we have come to believe. There are frequently other political or social forces at work.

Camphene was phased out and kerosene was phased in by virtue of a variety of non-market forces. The Civil War cut off Southern pine forest turpentine supplies. The IRS was established to pay for the Civil War, and their first tax was on alcohol (initially beverage[s] but it applied to all fuel uses of alcohol). Some people saw the end of one industry and the beginning of another and accelerated the process while buying stock to profit from the transition.

So the kerosene/oil industry was born with the silver spoon of subsidy firmly lodged in its teeth, and today’s solemn proclamations about the industry’s long standing opposition to subsidies strikes me as historically inaccurate.

But the histories of the oil industry were written mostly by the oil industry, so it is no surprise that the whale oil myth took root, despite the facts, and is frequently cited today. Thanks.”

Now for those few of you still reading this, first let me say that I admire your perseverance. Second, may I admit that I was swayed, and maybe even a bit embarrassed? That’s more than I ever knew about the competitors to whale oil in the 1850s – more than I ever figured to know. (So I can imagine how you’re feeling right about now.)

On the other hand, Lester Lave is a devout conservationist and alternative energy champion who was actually suggesting, in this very story, a government tax on oil should it fall too far in price – a price floor to make sure oil remained expensive enough that alternatives could flourish. In terms of the “invisible hand” metaphor, that is, Lave’s interventionist mitts were there for all to see. But it still mattered to me if I was perpetrating a whale oil “myth.”

So I thanked Professor Kovarik, and copied the entire exchange to Lave, not only a chaired professor of economics at Carnegie-Mellon but a “University Professor” (the highest faculty distinction you can get) and director of the school’s Green Design Initiative. He too was hardly at a loss for words:

There was a piece in the New York Times Sunday on whale oil (Peter Appelbome, “They Used to Say Whale Oil Was Indispensable, Too.”)

He says that whaling was the fifth-largest U.S. industry in the 1850s — 735 ships out of 900 in the world. He says that whale oil was considered far superior to campher, lard and other substitutes. He claims that whaling was in severe decline by 1861 — even though the first oil well (in Titusville, [Pa.]) was 1859 – there could not have been much kerosene coming to market yet. He traces the decline to depletion of the easily accessible whale population – 8,000 whales killed in 1853 alone.

An economic view is that the cost of whale oil rose as the whale population was depleted. Ships had to go further and stay out longer to get their quota. The price rose, only the rich were willing to pay for this luxury good, and so the number of ships declined. The implication is that the whaling industry killed itself by depleting the whales. Kerosene filled the market until [Thomas] Edison came long in 1894 with the Pearl Street Station.

This seems to be a tempest in a tea pot. Eight thousand whales caught with perhaps 20 barrels of oil each is 160,000 barrels of oil or 6 million gallons. With more than 1 billion people in the world, that is 1/170 of a gallon per person. Even if you consider just the USA and Europe, that would be 1/20 of a gallon each. That is not much light. Clearly, only the rich lighted their homes with whale oil.

I don’t understand how a government tax on alcohol had anything to do with this. Burning alcohol for light is not wonderful – they have to turn out the lights for you to see the flame. I don’t understand the subsidy argument.

The Civil War certainly distracted the U.S. whaling industry, but that just left more whales for the Europeans. The U.S. could have gone back to whaling after the war, if kerosene had not taken over the market and the cost of a gallon of whale oil not become too high.

So, free market? Subsidization? I interpret the story to indicate that depletion of the whale population was the primary culprit. I don’t see any evidence of subsidization. Applebome cites Eric Jay Dolan’s, “Leviathan: The history of whaling in America.”

Fascinating, especially for history buffs. Or, perhaps, members of the Herman Melville fan club. So had my “correction” been incorrect? When I thanked Professor Lave and asked him if I could quote him on the Business Desk, to illustrate the fate of a journalist embroiled in a cross-fire perhaps no one in America, including him, has time for or can even quite follow, he responded further:

Absolutely. To elaborate: We switched from wood to coal because Europe ran out of trees….We have learned to use less tin (tin cans) because of high prices. In general, scarcity or just high prices prompt technological change. We are farming salmon, shrimp, catfish, beef, chickens, etc. because there aren’t enough wild animals to satisfy demand. So high prices are one source of changes in materials and energy use. A second source is technology. We didn’t run out of kerosene or city gas – electric lights were superior. We didn’t run out of horses – motor vehicles were superior. We didn’t run out of hydropower to run factories, electricity and internal combustion engineers were superior. Thus, developing superior products and processes are another motive for innovation.

Now if you’re still reading at this point, you’re arguably a masochist, which would imply that you’re far from averse to more pain. Fortunately for you, I have some: from Professor Kovarik, in response to the above from Professor Lave:

As arcane as it may seem, the whale oil myth is a good illustration of the ongoing debate over energy policy. It matters because the implication that conservative economists draw from the “whale oil myth” is that the invisible hand of the marketplace is appropriately the main (if not only) driving force behind change in energy use. Liberals see a stronger role for government. In fact, the last time energy was this high on the public agenda, liberals like Sen. Henry Scoop Jackson railed against the deregulation of petroleum industry as bowing to Walter Wriston’s “whale oil myth.” I think Jackson would be happier with where things are now and the general recognition (even by conservatives) that national security (at least) indicates a stronger role for government.
I stand by the opinions and information here.

It’s hard to imagine why Dr. Lave would say: “I don’t understand the subsidy argument.”
The argument is simple. In 1862, the dominant fuel (camphene) is taxed at over $2.00 a gallon, while the emerging new fuel (kerosene from Pennsylvania) is taxed at 10 cents a gallon. Not a subsidy? Perhaps tax advantage is a more precise term than subsidy. Even so, the point is that the policy, more than the market, is what changed the way Americans used energy in the 1860s.

I agree, this is not an earth-shaking question, but it is at least a notch up from “tempest in a teapot.” Drawing the wrong lesson from inaccurate history can have impacts.

By the way, I’m working on book called “The Summer Spirit: A history of renewable energy,” to be published in 2010. The Whale Oil Myth is the first chapter. A visual outline of the book is [here”].

Thanks
Bill Kovarik, Ph.D.

P.S. — I can’t resist a quick note on a peripheral point: Dr. Lave says: “Burning alcohol for light is not wonderful – they have to turn out the lights for you to see the flame.” That’s true for pure alcohol, but camphene was a blend of turpentine, alcohol and camphor oil. It tested brighter than kerosene, according to Congressional testimony from the Edison Testing laboratory in 1906. Sometimes, the past is a surprising country.

Utterly fascinating. But my god, how long it takes. So, two final questions. No. 1: what’s the bottom line? No. 2: why in the world have I subjected innocent visitors to the Business Desk to such minutiae?

Well, first, the professors – who line up on exactly the same side of the energy divide, mind you – don’t even disagree about government intervention.

True, free market boosters like Walter Wriston, former CEO of Citicorp and Reagan advisor, liked to trot out the whale oil story to suggest intervention is superfluous. But environmentalists like Amory Lovins also use the story — to argue that we can break away from fossil fuels because “Big fast changes have happened before.” And that’s what Lave was saying: we ought to change our energy policy, and we can. While Kovarik is saying, history is more complicated than we realize and don’t jump to hasty conclusions.

But why I am going on and on to deliver such anticlimactic punchlines? Call it a plea for pity. Or, more accurately, for understanding the complexity — and limits — of the journalist’s job.

After all this back and forth, it remains unclear to me how big a role the government did or didn’t play in the development of the petroleum industry. I am never going to know enough about the inadvertent camphene tax (Camphene? You ever hear of camphene?) — never going to know enough to argue with either of these professors.
Think how long that would take.

Or put it another way. You, the public (or the one member of the public still reading at this point), pay about half my salary. (Foundations and corporations pay the rest.) Is this what YOU want me to be doing?

Professor Kovarik shows something less than esteem in writing that “televised history almost has to be shallow,” but of course he didn’t expect the line to appear on a TV correspondent’s web page. But “shallow” compared to what? A college course? A book? Enough books on both sides of an issue to become an expert and come to a definitive conclusion of one’s own?

We journalists have a great job. Or at least I do. At the NewsHour, we get an eternity, by network news standards, to prepare our stories and to tell them. And yet, we always leave out vastly more than we put in. We always try to say things in shorthand, try to simplify. And we can never check EVERYTHING out. So we’re always subject to the charge that we oversimplify. Maybe now you can see why.