The Energy Shock of the 14th Century

The Great Famine of 1315-17

In the previous post, I argued that China is likely to weather the 2026 Oil Shock in a reasonably effective manner. A couple of supporters asked me what I think about its effect on America. I am not an energy expert, so I looked up what those, whose specialty is to analyze such issues, say. The mainstream opinion is that there will be adverse effects, but nothing catastrophic.

For example, yesterday OECD warned Trump and Iran that they have a month to reopen Strait of Hormuz. But what will be the dire consequences, if they don’t? Not a world-wide depression, as you might think, but merely a mild economic slowdown. Well, OECD called it “major slowdown,” but if Hormuz is not opened, in 2027 it forecasts that global economic growth will be 1.8% (about half of 3.4% in 2025).

Other analysts are even more optimistic. Writing today in NYT, Christopher Smart, who was a Treasury official in the Obama administration, suggests that The Strait of Hormuz Is Getting Less Dire by the Day. Although he doesn’t use the word “resilience”, his argument is, essentially, that the global economy turned to be resilient to this particular shock. People are traveling less. (I, personally, took this risk seriously enough to cancel my planned trips this summer.) China is buying more Russian oil (and Trump has eased sanctions on it). Other Asian countries are introducing rationing.

The worst hit is the aviation industry. One company (Spirit Airlines) went bankrupt. Lufthansa canceled 20,000 flights — but mostly on local and less profitable routes.

The prevailing mood, overall, is optimistic. Stocks are higher than ever, while the worst forecasts for oil futures haven’t materialized (so far). Of course, markets have been wrong in the past, so their optimism should be taken with a grain of salt.

Are there historical precedents that can place the current crisis in perspective? The obvious one is the Oil Shocks of the 1970s, but in my previous post I went deeper into the past by remembering the Great Famine of 1315-17. Interestingly, that shock was also based on an energy deficit.

For three summers northwestern Europe found itself under an unusually heavy cloud cover. The sun’s energy couldn’t get through to the crops. Instead, they were inundated by heavy rains.

Wheat Field in Rain by Vincent van Gogh

In these cold and wet conditions crops rotted and domestic animals died from disease. If oil provides the basis of our contemporary civilization, as they say, solar-based agriculture played the same role during the pre-industrial, agrarian period, because grain provided energy that powered both humans and horses.

The magnitude of the 14th century’s energy shock was similar to the one today. Bad weather reduced crop productivity by roughly 15-20%.

About 20% of oil in the world is produced in the Gulf, but some of it is transported by land (pipelines and rail) and some is allowed out by Iran through the Straits. So, the magnitude of impact is about the same. But our civilization is more resilient than the medieval agrarian one. I don’t expect that 10% of population will perish (as happened in England and France in 1315-17). In other words, my personal (inexpert) assessment is that the world is resilient to this shock. There will be a lot of hardship, but we will muddle through.