Energy Lessons From the Great Plague

I was a big Monty Python fan in the 1970s. The “Bring out your dead!” sketch from their Holy Grail movie was the epitome of black humour, a hallmark of the comedy troupe.

Now we are watching real-time footage of the COVID-19 pandemic. Scenes from abroad are disturbing, with jammed hospitals, quarantines and dying patients. The Python parody of a 14th-century corpse collector, gathering bodies during the Great Plague, is no longer funny.

Somewhere between the bookends of humour and anguish, we can learn much from such societally disruptive events. For example, a key economic lesson from the bubonic plague is to ensure that supply chains in the economy are preserved, especially for vital segments that require skilled labour. That’s especially important to think about right now, in the early throes of the virus’s impact.

Inevitably, the COVID-19 crisis will shift from a people-killing pandemic to a job-killing contagion for major segments of our economy. In this regard, governments will need to triage the segments most vulnerable to bankruptcy and unemployment. Central bank interventions, such as the US Federal Reserve’s zero interest rate and credit liquidity program, are helpful, but the world’s finance ministries will need to do more to avert the market death of vital businesses.

We’ve seen this movie before.

The Black Death was the worst pandemic in written history. Scholars suggest that, between 1347 and 1351, somewhere between a third and a half of Europe’s population was wiped out, up to 200 million people globally. (And there actually were people who went around with wooden carts collecting the dead for mass burial.)

During pandemics, demand for consumer goods falls precipitously. By 1350, the demand for milled flour and other foodstuffs had fallen sharply. And that had collateral consequences for the energy industry of the day.

Back then, the milling of food products, for example turning wheat into flour, was done by grinding raw grains between two circular pieces of stone. This millstone assembly looked like two thick plates stacked one on top of the other. Rotating one of them ground the grains to make food staples.

Energy was needed to rotate heavy millstones, especially the big ones that were the size of a table. In the 14th century, the dominant sources of rotational power, starting with the simplest, were human muscles, horse mills, water mills and windmills.

There was a cost structure to this medieval energy mix. Human muscles were the low-cost supplier but couldn’t produce great quantity. Horses were next up the cost curve; they walked round and round strapped to a radial pole, turning a millstone. Domesticated animals were more productive than humans but needed to be cared for and fed — an added cost. Water mills and windmills had a lot of productive power, but were more complicated mechanically. Cogs and axles were made mostly from wood and required a skilled carpenter to maintain them. As such, mills powered by water or wind were the most expensive to operate.

Medieval records show that these higher-cost operations were hit first and hardest by the bubonic plague. Skilled carpenters and millstone makers were thrown out of work. Grimly, many of them were subsequently debilitated or outright killed by the disease. Consequently, permanent damage was done to the energy industries of the day. After the plague ended, ramping up water and wind operations took a long time because the pool of skilled labour had been hollowed out.

Fast forward to today. Much as happened almost 700 years ago, wide segments of our economy are being forced to shut down.

With swift and concerted action by government, industries and people, COVID-19 may not be as potent a killer as the bubonic plague, but the drop-off in demand for nearly every type of good in our economy (except toilet paper and hand sanitizer) has the potential to kill entire industry segments. Airlines, hotels, restaurants and others in the hospitality industry are at the top of the list. Western oil and gas companies are not far behind, with the exacerbating problem of an opportunistic price war.

Let’s think about the Canadian oil and gas industry as a case study, in particular the segment that is the oilfield services business. The companies within—basically the carpenters and millstone makers of medieval times — are the most vulnerable to market death. Already, as the glut of oil pounds down commodity prices, layoff notices are going out to skilled field personnel.

The numbers are staggering. If oil prices average $US35/B for a year, cash flow will evaporate, and some tens of billions of dollars’ worth of investment will disappear. Gutting the oilfield service sector will deplete the labour pool by thousands of jobs and make it doubly hard for an already hobbling industry to recover after the chaos ends. These are the workers on the front lines of extracting a suite of products that put gas in your car, heat your home and transports your food among many other vital things in our modern economy.

In that regard, much as life returned to some sense of normalcy seven centuries ago, we know the COVID-19 pandemic will end. That’s easy to say, of course. Between now and then it seems daunting to find quick solutions to a colossal problem. Perhaps the answer to curing a sick economy lies in handling the pandemic itself: The Holy Grail for our nation may be achieved by triaging the damage being done to various segments of the economy. By working together, in tandem with effective government policies, we may ensure that vital service—and the people who provide them—are supported, enabling our economy to come out of this crisis faster and healthier.