Jeff: Welcome to The PE Gym!
You've already started analyzing the problem, which is the first thing to do.
Now, let's try to pinpoint exactly what's happening. What do you mean by "irritated"? Does it look red, like a rash, or what? You might be on the right track with thinking the lubricant could be the problem. You might want to try a different lubricant, such as Astroglide (which is water based, unlike the two you're using now).
In the meantime, though, take a break until everything returns to normal. This may take a few days.
As for the question:
"Does penis exercising cause a lack of sensation over time?" No, not if you do it right. In fact, many men report that it increases sensitivity overtime. With that in mind, you must be doing something wrong. Go over some of the tips in the book again, particularly:
- Use very very (again, very!) light intensity at first. Gentle tugs and gentle jelq strokes.
- Don't jelq, stretch, or grab the head.
- Avoid putting any pressure on the top part of your penis, as that is where the dorsal nerves are.
Also, you may want to try the Progressive Routine (outlined in the book) first. It's light intensity, so it will allow you to "get the hang" of everything before going further.
Hope this helps. Let me know if you have any other questions.