1.1 Short history of oil, gas, and mining

Thought-provoking questions:

1. Why has mining historically played such an important role in the world economy?
2. What has driven changes and trends in oil, gas, and mining in the modern era?

JEFF SACHS: Hi, I’m Jeff Sachs, director of the Earth Institute at Columbia University and special advisor to U.N. Secretary General Ban Ki-moon. In this chapter I want to talk about the history of mining in the world economy. Now it doesn’t get more important than mining.

In fact, mining has been so important because of the materials that it produces and the technologies and tools that it enables that we even define the timelines of human history according to what is brought up from the ground.

Of course, in the ancient past of our species, before agriculture began, we have the so-called, Paleolithic or old Stone Age era. So stone was the main mining object and pouring object. After the end of the last Ice Age and at the beginning of agriculture, about 10,000 years ago, we have the Neolithic era, the new Stone Age era. But then, over time, humanity, human beings in specific locations close to mineral ores began to master the process of smelting metals.

And about 3000 B.C. we entered the famed Bronze Age, which was yet another massive advance in human civilization with the smelting of copper and tin and the alloys that were produced creating new technologies, new advances, new ways to make armaments and many other human tools.

About 1000 B.C., yet another crucial mineral, iron ore, was smelted to produce iron and small amounts of steel at least, we entered the Iron Age. And again, massive changes of civilization and technology which came with this new mining industry, with this new mineral deposit.

I would say that the modern era which we usually date to the Industrial Revolution can also be related to the extractive sector in a quite fundamental way, because it’s fair to say that the entire modern world, the modern world economy that came roughly around 1800 onward is the fossil fuel age.

It’s the age of coal, oil, and gas. What you’re looking at in this picture is probably the most important machine of modern history, it’s the steam engine. It’s the steam engine invented by James Watt and brought to market around 1776.

It transformed the world economy fundamentally by allowing humanity to tap coal for massive amounts of energy that made possible the industrial era.

This is a graph of world output over a 2000-year period. You see a kind of turning point, a disruption as we would now say, starting around 1800, when the world economy starts to grow relentlessly in the modern economic era.

That is because of coal. That’s because of James Watt. That’s because of the massive amounts of energy that we were able to tap. And coal created the modern world. From there came another great advance starting around 1850 and developed further in the 1860s, 1870s, 1880s, by people famous today, Daimler and Benz and names associated with the automobiles they drive. You’re looking at one of the early internal combustion engines, which allowed us to use petroleum, which before the internal combustion engine was just used for very limited purposes, but now could be used for mass transport.

Here you’re looking at a third major breakthrough, the gas turbine, which enabled the use of natural gas to create massive amounts of power, power to generate electricity, power to move giant ocean freight, power to power today’s jet airlines. And this means that with the steam engine, with the internal combustion engine, with the gas turbine, we had a series of breakthroughs that created the modern energy world, but all fundamentally part of the mining sector, the extractive industry sector.

Now the world’s also been defined by the basic fact that the location of these vital minerals and energy deposits is highly variable around the world. You’re looking here at a map depicting the coal deposits in the world. Lots of coal in North America, in Russia, China, India, Australia, South Africa. But look at the rest of Africa.

Almost devoid of coal, almost impossible for Africa to industrialize in the 19th Century until, indeed, until very, very recently. A lot of South America with very, very limited coal deposits.

In the next picture, you’re looking at oil reserves, where they’re located. Of course the Middle East is the center of about 70% of the proven reserves of oil around the world. Again, much of Africa, devoid of oil. Again, another great limitation to Africa’s economic development until recently. The United States, blessed with oil just as it was blessed with coal, blessed with almost everything. A continent of vast mineral resources.

The next map shows you where natural gas is produced. Again, in parts of Russia, the former Soviet Union, the Middle East, the United States, of course. Sad, again, for Africa, not very many major natural gas producers.

Well a short history really requires days, months to discuss this core subject of how mineral resources and energy resources transformed the world again and again and shaped geopolitics. Where there’s been oil, coal, gas, there’s been a competition that’s intense. We’re going to talk about that in another chapter.