How the World Really Works: A Scientist’s Guide to Our Past, Present and Future

by Vaclav Smil

Global oil extraction of crude oil doubled during the 1950s, and by 1964 crude oil surpassed coal as the world’s most important fossil fuel, but although its output kept on rising, supply remained plentiful and so prices were falling. In constant (inflation-adjusted) monies, the world oil price was lower in 1950 than it was in 1940, lower in 1960 than in 1950—and lower still in 1970 than in 1960.43 Not surprisingly, demand was coming from all sectors. In real terms, crude oil was so cheap that there were no incentives to use it efficiently: American houses in regions with a cold climate, increasingly heated by oil furnaces, were built with single-glazed windows and without adequate wall insulation; the average efficiency of American cars actually declined between 1933 and 1973; and energy-intensive industries continued to operate by using inefficient processes.44 Perhaps most notably, America’s pace of replacing old open-hearth furnaces with superior oxygen furnaces to make steel was much slower than in Japan and Western Europe.