The American whale oil industry: A look back to the future of the American petroleum industry?

Abstract

The American whaling industry rose from humble beginnings off Long island to become an international giant. In its peak year, 1846, 735 ships and 70,000 people served the industry. As whale stocks and reserves decreased, whalers were forced to go farther and farther from their New England home ports. Voyages became longer, and risks on required return-on-investment became higher. The “easy money” of Atlantic and Pacific whaling was no more: the only remaining profitable ventures were to Arctic and Antarctic waters. Many ships returned empty, if at all. in 1871, most of the Arctic whaling fleet was crushed by early winter ice and lost. This calamity, in conjunction with the long-term diminishing whale stocks, the diversion of investment capital to more profitable ventures, and the discovery, development, and refinement of abundant petroleum crude oil, struck the death blow to the American whaling industry. By 1890, only 200 whaling vessels were at work, and by 1971, no American commercial whaling ship sailed the world's oceans. It is apparent that no single event caused the final, rapid decline. However, a single calamity, in an already stressed industry, that was self-insured and commercially interlinked, precipitated the end. Today's American petroleum industry, although adopting some principles of the American whaling industry, also has embraced other activities such as work process reengineering and customer alliances, which may preempt, or postpone, a similar catastrophic demise.