Erik J. Dahl teaches naval history at the Naval War College in the United States, and in his paper on Naval Innovation – From Coal to Oil provides an overview of this spectacular period.
1. Coal was replaced by oil because of logistical challenges
The logistical challenges in holding the British Empire together were truly enormous. Just to transport coal from the Cardiff in the UK to the far-flung reaches of the empire, to store the coal on deposit sites there, and for reloading the ships with coal, required enormous manpower. This happened at a time when the population boom slowed, and sailing skills were in short supply. The war-machine was particularily vulnerable to attacks, managing supply chains became a logistical nightmare, because ships needed to return to depot sites to refuel.
2. Technological Upmanship
The Royal Navy increasingly feared the sophisticated Italian navy developing oil-fired ships, the Italians had progressed faster then the British. But their greatest fear was Germany, this conflict has encouraged the Lord of the Admirality to further mechanize the Royal Navy, and to invest in the Dreadnought to counter German naval power on the high seas, because of their proximity to the British Isles. But the main problem was always that Britain did not have any indigenious oil supplies, which meant Britain was especially vulnerable to foreign control, a very dangerous situation for an island nation.
Over time, it became more and more evident that the U.S. Navy was much faster with their oil-fired ships then the Royal Navy. At that point, the Italians and Americans were leading in terms of naval innovation. On top of that, the U.S. Navy benefited from the new design because less manpower and space was needed to store solid fuel. Instead, the U.S. Navy could store oil in tanks almost anywhere and refuel ships at sea. There was also less smoke which would have made it much easier to pinpoint one’s exact location, and one could travel twice as far.
3. Geopolitical moves
So what Britain did was to find a suitable oil supplier. So the Royal Navy and the British government looked around and decided that Persia fits their agenda. Luckily, there were two companies already present in that region, one of them was Dutch, Royal Dutch Shell, the other one was English, Anglo-Persian Oil Company. Anglo-Persian Oil Company was much smaller but it was British. It was hoped that this step would increase competition in the oil industry in Iran and the Gulf region. They decided to support the smaller player. Thus the British government acquired a 51% stake in the Anglo-Persian oil company.
4. What to take away from all of this
It is quite interesting to see that energy markets move in tandem with geopolitical events, but resource availability and technological innovation play a major role as well. What strikes me is that technological innovation is not sufficient for technological disruption. In Britain’s case, there was no need to abandon coal, the Royal Navy decided to sprinkle oil on coal, to improve the quality of the solid fuel. Rapid change usually comes when there is an external threat that makes it impossible to continue with the old ways, and instills new ways of thinking.
To recap, let me quote Rex Tillerson who gave an interview to Bloomberg in 2013, back then he was the CEO of ExxonMobil:
“When coal came into the picture, it took about 50 or 60 years to displace timber. Then crude oil was found, and it took 60, 70 years, and then natural gas. So it takes 100 years or more for some new breakthrough in energy to become the dominant source.”
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