PREDICTIONS – 10 Years Later - Santa Fe Institute

7. COMPETITION IS THE CREATOR AND THE REGULATOR
THE PRIMARY ENERGY PICTURE
Another market where various technologies coexist and compete with
each other is that of primary energy sources. This is Marchetti’s oldest,
favorite and most often-cited example, first published in 1975. He
wrote then: “I started from the somehow iconoclastic hypothesis that the
different primary energy sources are commodities competing for a market,
like different brands of soap ... so that the rules of the game may
after all be the same.” 12
Marchetti then applied the generalized substitution model and found
surprisingly good description of worldwide data over a historical window
of more than one hundred years. His updated results are
reproduced in Figure 7.6. During the last one hundred years, wood,
coal, natural gas, and nuclear energy are the main protagonists in supplying
the world with energy. More than one energy source is present at
any time, but the leading role passes from one to the other. Wind power
and water power have been left out because they command too small a
market share.
In the early nineteenth century and before, most of the world’s energy
needs were satisfied through wood burning and to a lesser extent animal
power not shown in the figure. Contrary to the popular image of coalburning
locomotives, wood remained the principal fuel for railroads in
the United States up to the 1870s. The substitution process shows that
the major energy source between 1870 and 1950 was coal. Oil became
the dominant player from 1940 onward, as the automobile matured, together
with petrochemical and other oil-based industries.
It becomes evident from this picture that a century-long history of an
energy source can be described quite well—smooth lines—with only
two constants, those required to define a straight line. (The curved sections
are calculated by subtracting the straight lines from 100 percent.)
The destiny of an energy source, then, seems to be cast during its early
childhood, as soon as the two constants describing the straight line can
be determined.
Marchetti goes through the usual exercise of forecasters; that is, he
considers a restricted historical window, determines the constants, and
then makes forecasts that can be checked against the remaining historical
points. Taking a window between 1900 and 1920, he finishes with
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