The alt.usage.english FAQ   

• "peter out"

  (Phrase Origins)
  
  

  
     This expression meaning "to dwindle to nothing" is recorded from
  1846, which precludes derivation "peter" in the sense "penis", an
  Americanism not attested until 1902.  "To peter out" was apparently
  first used by American miners referring to exhausted veins of ore.
  The origin is uncertain.  It may come from "saltpetre" (used in the
  miners' explosives, so called because it forms a salt-like crust
  on rocks, ultimately from Greek _petra_ = "rock", whence we also
  get "petrify" and "petroleum"); or it may come from French _peter_,
  which literally means "to fart" but is used figuratively to mean
  "to fizzle" and in the phrase _peter dans la main_ = "to come to
  nothing" (this comes from the Indo-European root _*perd-/_*pezd-_,
  whence we get "fart", "feisty", "fizzle", "partridge", "pedicular",
  and "petard").

  
  
  Source: [Mark Israel, 'Phrase Origins: "peter out"', The alt.usage.english FAQ file,(line 5174), (29 Sept 1997)]
  
  
  
  

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