[MUSIC].

So, enough with the abstractions.

What I'd like to do in this video is take a look at how demand

for primary energy resources has evolved over time.

And recall from our previous video, we told the

story whereby energy use evolved with advances in technology.

In fact, scholars who study transitions in energy use often break

down different eras of energy use, according

to the technologies that were being implemented.

Within which different primary resources were being used.

And typically, those primary resources were successively

more energy dense types of primary energy resources.

[SOUND] So I put together my own summary of these eras.

I don't intend for this to be a sort of.

An exhaustive summary of technology and primary energy

use and I encourage you to [SOUND] you

know contribute to the discussion boards and criticize

and supplement and complement this, this discussion here.

I'd also, You'll notice that this is largely a western history.

That's really a matter of convenience.

Just because, some of the data that I want to

speak to towards the end of the video, is.

Is is US data.

It's a little easier for me to get my hand on US data.

[SOUND] So [SOUND] again I, I would love to hear

other sort of supporting or competing stories to the story we're telling here.

That you may be aware of from information

you gather from other resources around the world.

Most importantly however bear in mind that, that the purpose here is not to

do an exhaustive history of energy use and technology.

It's really to lay the groundwork for our thinking about the business challenges.

In developing primary energy resources.

So we're just going to look at this kind of sample

to get a deeper understanding of how demand evolves over time.

So the first era that I like to think

about is basically the, what I call pre-industrial era.

This is when the primary technology that was in use was organized.

Agriculture, settled agriculture and this spans back at least

in the western world many, many centuries before the 1700s.

But this really we had a, a relatively common type of economic structure,

the type of work that we needed over that long period of time.

Was mechanical work for doing work in the fields.

This might be [SOUND] this might be manual labor or draft animal labor.

But basically mechanical work is, is what

we needed to, to produce agricultural products

and thebn maybe a little bit of

other mechanical work for transporting goods to market.

And then of course, you know, to the extent people

could afford it and have the time to get the resources.

Thermal work for heating and the lighting primarily in

homes, since most of the work was done outside.

So here, as we discussed in the earlier video most of our calories

were coming from food both for the manual labor and the draft animal labor.

We may have in this period made some use of renuables.

You know we talked a little bit about hydro and wind and if

you look into the history of those technologies you'll see they span back

relatively far and they could've been put to use, in a milling operations

predominantly because that was one of the

main things that you could essentially automate.

Which was associated with an agricultural economy.

We used you know may be some wind for you can think about wind for

sales ship so for transportation and, and and then we were really using wood for

anything that we weren't getting for the

bulk of our energy that we weren't basically

consuming in the form of food and then doing manual work we would, we're getting

some of our energy from wood for heating, for instance.

There's certainly a, you know, when other technology could

look at is for lighting, looking back through the

centuries we use things like lamps and we would

basically use oils that were derived from food products.

[SOUND] I then like to think of something I would call the early industrial era.

And this is really defined by, in my mind, by the advanced

metallurgical practices that were kind of, used in an extensive way at that time.

This is not to say that metallurgy was somehow invented then.

But by this time [SOUND] knowledge of metallurgy wa, was being used extensively.

And you started to see mechanization of certain processes in agriculture.

But also, with better metallurgy, which allowed

manufacture of machine tools, which allowed manufacture

of machines, automation of all kinds of goods that we used to produce at home.

So basically the advent of a manufacturing sector.

We also needed mechanical work for transportation and

then, of course, continued need for heating and lighting.

And so what you see in this era is continued use of wood for heat.

Because [SOUND] we really didn't

have energy, many energy producing technologies.

We, these technologies were, were basically [SOUND] still

leveraging the older forms of energy that we had used, but you started to

see some use of coal for some thermal and mechanical needs and manufacturing

particularly in fabricating these machine tools and, and metal machines.

[BLANK_AUDIO].

The next period I would say is sort of what

I think of as the heart of the industrial era.

Some economists will call this the

second industrial revolution with early industrialization.

But I call early industrialization being the first industrial revolution.

But it was really in this heart of industrialization and mechanization that

we started to see use of the steam engine in manufacturing

to create Mechanical work, to do the mechanical work we need it.

So here you start to see growing use of coal.

Because it can be used to heat water to run the steam engines.

And with economies of scales in mining and transportation.

Of you know coal products, they started to make coal at the margin or

cost effective for use inside of the home so lets say for home heating.

And finally in this era was when we, we did see

not, not a tech, we [INAUDIBLE] technology invented but not something

that I would say defined by its extensive use this era but [SOUND]

the sort of, invention of the, the, the dynamos.

So electrical generation and electric motors basically kind

of were being invented and perfected in this period.

So you start to see use of coal for electrical generation, not just for

Use for its, its ability to do thermal work to

run a steam engine, but it's, it's use in electric generation.

And finally you start to see some emerging use of petroleum products because [SOUND]

another technology that becomes predominant in the

next era is invented in this period.

And those technologies are the dynamo, you know, the, the sort of core

invention behind, [SOUND] electrical generators and

electrical motors and the internal combustion engine.

So here we are in the 20th century for the most part.

You know, maybe late 1800s, but for the most part the 1900s.

Up into the beyond the middle of 1900s at least in the late 1900s.

And here you have mechanical needs for manufacturing you know, much more

diverse types of manufactured products emerging and demand for those products.

Individualized transportation with, the internal combustion engine which was,

could be really scaled down and sort of wind up.

You know developing hand in hand with the automobile.

[SOUND] And then electrical was being

used increasingly in industry for manufacturing goods.

[SOUND] So, what you see in this era is demand for the

types of primary energy resources that can do that kind of work.

Continued use of coal, but now coal is increasingly being used for electrical

generation and almost never being used for steam engines, presumably.

And then growing use of petroleum, because of

the penetration and wide spread use of the

internal combustion engine, but also petroleum products will

start to be used for, chemicals and plastics.

So actually, energy embodied in the very product you know,

in the product we're using in the form of petroleum.

And then in the later part of this era you'll start to see some

diversification of primary energy resources, because really

what we're demanding here is lots of electricity.

So coal, which had an established man production base coal-fired

electrical generation basically could kind of, could grow, a, against that base.

But a, essentially, what we're needing here is

any kind of electricity and this is where you

start to see the advent of a couple different

technologies that can compete for coal for electrical generation.

And finally, the last era, I would call, the one we're in now, sort of the late

Nine, 1900s, you know, certainly

post development of the microprocessor and, and and

storage, and data storage which was in the late 60s and 70s.

[SOUND] Now you're seeing mechanical needs in manufacturing

continuing to see mechanical needs in manufacturing and transportation.

But increasing demand for electrical power for automation

of manufacturing and, and, and the sort of new thing defining this

information era is now a lot of value creation in

the economy is, is through

information processing and transmission and consumption.

So again, [NOISE] here what we're observing is certainly continued use

of that base of electrical generation capacity that's fired by coal.

But can, but growing use of, petroleum products

in particular, emerging use of natural gas, because

natural gas can be used to fire generation

capacity and also growth of renewables in electrical generation.

I won't get into this last point that I put on the slide

here, but we'll also observe some use at the end of this era.

For transportation demand that's emerging in other countries.

So that, that's what's supporting demand for oil in particular.

But, petroleum products more generally.

So I want to share with you a, slide

[BLANK_AUDIO]

And this is a chart I [SOUND] found at the U.S. Energy Information

Administration so one of the data resources that I'd

encourage you to go familiarize yourself with and, and mine

as you see fit, there's lots of great data at their website.

And what I wanted to do is just take a, a look at this chart to

kind of review the different eras of energy,

primary energy consumption that we just discussed or outlined.

So, this chart provides estimates you know, of course we

can all question what kind of data collection was going on back in the late

1700s but what they try to do is provide estimates of the

amount of energy, in this case they measure it in BTUs.

Or quadrillion BTUs.

The measure is not really that important.

What I'm more interested in is how the different types

of primary energy are growing and declining and changing over time.

That's what I really want to highlight here with this chart.

[BLANK_AUDIO]

So you recall in our, typology or you know, our delineation of the eras.

I kind of called things up through much of

the 1700s what I would call the agricultural area.

This is when we were pretty much utilizing wood.

As a fuel to the using of fuel other than food, so food is not represented on

here, and you can, you know, ask yourself just

how would food have compared to wood but basically

this is an era where all of our, our energy was coming in the form of food

calories, and then some in, in this biomass of

wood being used for home heating, things like that.

The next era recall I'd like to think about is where centuries of innovation

and metallurgy all came together to really kick off industrialization.

So the first one as I mentioned some

economists and historians would call the first industrial revolution.

[SOUND] But this is really where manufacturing starts to take off.

So here we see a growth in some, in the use of wood.

Largely you know, because [SOUND] technologies for completely automating.

Mechanical work do not come into extensive use until the ladder part of this era.

But during, at the ladder part of this era

you start to see the emergence of coal being used.

And that's coal for for, mechanical power production.

[BLANK_AUDIO]

Because, in the metallurgical era one of the inventions is

the steam engine, which is really what dominates the next era.

And coal is being used to, to heat water.

Into steam to run the steam engines.

So in this next era where you really see the use of coal take off and expand

dramatically and you start to see the weaning of wood being used as a

primary energy source because coal [NOISE] is starting to be used in not only around,

in, in factories for mechanical work production through

the steam engine but also at home because

if there's a lot of coal floating around the world then it's a lot easier

for people to just at the margin purchase coal for home heat production as well.

And at the latter part of this era, [SOUND] you start to see the emergence of

petroleum being used because again one of the technologies that defines

the next era, is the internal combustion engine so we see petroleum starting

to be used largely for transportation but also as demand for manufactured good grows

different kinds of plastics and products that

actually utilize petroleum as, as a material input.

And also we see growth in electrification of all kinds

of processes of manufacturing processes but also of just home activities.

You know, more and more people over this time period are getting vacuum

cleaners and washing machines and all of these types of conveniences in the home.

So electrification becomes a huge defining aspect of this period as we start to

implement, the innovation of electrical generators and electrical motors which

in principle were, you know, developed back in the latter part of the 19th

century developed and to some extent perfected, sufficiently [SOUND] back then.

So this period you know, we start, we, we have lots

of demand for electricity and so you start to see also towards

the end of this period some degree of growth certainly

in hydroelectric power which we saw emerging at the end of the prior period.

But also natural gas, partly because it can be used to used in goods as a material

input for, for goods that we consume, let's say, like fertilizer or something.

But, it's also being used for gas-fired generation.

And in particular that becomes the case when we move into the information era.

And in the information era you know what, we really see is a more

extensive diversification of our primary energy resources

but largely defined by in you know,

what I'd like you to be thinking about is largely defined by the type

of work that people are seeking which is electrical work that they are using.

That's what they are consuming or thinking about demand at this point.

So certainly there is, you know, lots of use petroleum products in transportation.

I'm not diminishing that in respect but the

really distinctive aspect of the technologies that are new.

And in wide use in this period are technologies using electricity.

So we have a growing portfolio of types

of primary resources that can be used for electricity.

Not only coal, but also natural gas for gas fire generation, nuclear and other

renewables finally starting to finally take off at the end of, of this period.

[BLANK_AUDIO]

So what I'd, I think that this chart illustrates

relatively well, the importance of the technologies and therefore,

the types of work we're deriving from these technologies,

for thinking about the different eras of primary energy use.

Through the U.S. and in principle you could put

this together for any country that you want to.

But [SOUND] I don't think that this

chart explains everything, because what our tech,

what our technological delineation here is show, is suggesting is that we're sort of

substituting from one type of, energy to another type of energy, when in fact,

towards the latter part of this period,

pretty much demand for everything is just exploding.

So what our, our delineation by technologies does is a

good job of, of sort of telling a story how we're,

how we're seeing substitution maybe

between certain technologies and maybe Emergence

of certain energy sources and emergence of new primary energy sources.

But it doesn't really explain everything and so what I'd like to do in the next

video is provide a brief overview of the determinants of demand.

So sort of, we'll, we'll do a bit of a general micro

economic discussion of demand determinates to try

to add a little more context to what's going on

with energy demand as we move into the 21st century.

[MUSIC]

Technological Dynamics of Energy Demand

Fundamentals of Global Energy Business

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