Category: Energy

Categories
Economics Energy History

Hoarding and Recession

While listening this afternoon to the latest edition of the Goodfellows podcast from the Hoover Institution I was reminded that I had been wanting to better understand the effects of hoarding behavior aggravating a situation such as the current conflict in the Middle East.

Wanting to explore this further I asked Grok the following: 

I’m listening to this discussion about recessions: https://youtu.be/UIB-fCsXzgs?si=L5kXmubqZOtcKnsz

Something I’ve wondered about in the present moment with the Iran situation is the effect of hoarding. 

What insights can you provide?

Here’s the response which I found very interesting:

Hoarding in the Iran Crisis: A Classic Shock Amplifier That Echoes the Podcast’s “Locusts and Pirates” Warning

You’re listening to exactly the right conversation. The Hoover Institution episode (just dropped today, March 25, 2026) with Tyler Goodspeed, Neil Ferguson, John Cochrane, and H.R. McMaster frames recessions as unpredictable “murders” by external shocks—locust plagues, pirate raids on shipping, coal strikes, or oil embargoes—rather than economies “dying of old age.”

The panel explicitly flags the ongoing Iran war as a live example: a potential energy shock via the Strait of Hormuz that could replay 1970s-style pain, especially if prolonged.

Hoarding is the behavioral multiplier they reference from history (panic coal buying in past shortages, 2020 toilet-paper runs), and right now it’s playing out in real time with the Iran situation.

Here’s a clear-eyed breakdown of its economic mechanics and recession implications.

The Current Iran Shock (as of March 25, 2026)

Since late February, U.S.-Israeli strikes on Iran (including the assassination of Supreme Leader Khamenei and hits on oil infrastructure) triggered Iranian retaliation: closure of the Strait of Hormuz, attacks on tankers, and disruption of ~20% of global seaborne oil and LNG. Oil prices spiked above $100/barrel (Brent briefly hit $120 in early March before partial pullback), European gas doubled in spots, and shipping has largely halted. The war is not over—Trump has signaled possible diplomacy, but Iran denies talks and continues missile activity—leaving markets in a state of fragile “wait-and-see” with elevated volatility.

This is precisely the kind of supply-side “Captain Hook” shock Goodspeed describes: physical disruption (not just fear) that raises input costs economy-wide.

How Hoarding Enters the Picture—and Why It Matters More Than People Realize

Hoarding here operates on three levels: national governments, corporations/refiners, and households. It’s rational self-protection in uncertainty, but collectively it turns a manageable disruption into a self-reinforcing spiral.

  • National-level hoarding (the big one right now): Asian importers (India, Bangladesh, Thailand, Philippines, Nepal, Pakistan) are already redirecting fuel from industry to households, imposing work-from-home orders, rationing cooking gas/LPG, shortening workweeks, and stationing troops at depots to prevent private hoarding. China—smartly—had pre-stocked ~1.4 billion barrels of crude before the war and is still buying aggressively. The result? A “mother of all bidding wars” for remaining supply, as one analyst put it. Even the U.S. and allies face pressure not to release Strategic Petroleum Reserves (SPR) too quickly, because everyone else is scrambling. IEA has ordered record releases, but if countries hoard reserves instead of sharing, global tightness worsens.
  • Corporate and trader hoarding: Refiners and traders are filling tanks wherever possible. Storage in the Gulf is hitting capacity, forcing producers to cut output (a real supply loss, not just transport). This adds non-fundamental demand and delays the normal market rebalancing.
  • Household panic buying: So far limited in the U.S./Europe (no widespread gas-line scenes yet), but it shows up as higher gasoline demand in Asia and could spread if prices keep climbing. The podcast’s historical note on 20th-century coal hoarding (“a woman begging for extra deliveries”) is spot-on for how this cascades.

The Recession Feedback Loop: Hoarding as an Accelerator

Here’s where it ties directly to the episode’s thesis:

  1. Price spike + inflation pass-through → Oil at $100+ for weeks/months fans headline inflation (0.4–1% globally per IMF models if sustained). Central banks face a dilemma: hike rates (worsening slowdown) or hold (letting inflation embed). The podcast notes 1970s price controls and windfall taxes amplified this exact dynamic.
  2. Demand destruction via higher costs → Households and businesses cut discretionary spending (travel, manufacturing, retail). Asian emerging markets—already rationing—are seeing this hit hardest and fastest. In the U.S., Goldman Sachs just raised recession odds to 25% citing the oil upside risk on top of softer jobs/retail data.
  3. Financial and confidence channel → Bidding wars drain liquidity, raise borrowing costs, and erode business investment. The episode highlights how supply shocks often trigger internal monetary drains (banks pull back lending) and equity drops—exactly what we’re seeing in modest S&P pullbacks and VIX spikes.
  4. Duration matters (the “prolonged” risk) → Short war = modest 10–30¢/gallon gas bump, limited recession odds. Prolonged Hormuz closure = guaranteed global recession via hoarding-driven tightness, per multiple analysts. Storage refill demand (U.S. SPR alone needs ~450 million barrels) adds extra buying pressure even after fighting stops.

Goodspeed’s optimism—that modern economies are more diversified and expansions last longer—still holds, but only if policymakers avoid 1970s mistakes (controls, hoarding of reserves). Strategic releases and diplomacy can short-circuit the hoarding spiral.

Bottom line: Hoarding isn’t the root cause (the Strait closure is), but it’s the behavioral “locust swarm” that turns a geopolitical event into a broader economic shock.

The podcast is prescient here—watch how SPR policy and Asian rationing play out in the next 2–4 weeks. If the war de-escalates quickly, hoarding fades and the recession scare passes.

If not, we’re living the exact multi-causal downturn the panel is warning about.

Categories
Africa Energy

Carrying the Light

We often imagine that the solutions to our biggest problems will be loud. We expect them to arrive with the ribbon-cutting of a massive power plant, the roar of a new turbine, or the stroke of a pen on comprehensive legislation.

But in South Africa, where the national grid has become a flickering ghost of its former self, the solution isn’t arriving with a bang. It is arriving in the form of a 23-pound box, carried by hand into a tin shack, priced at two dollars a day.

I was reading a recent story in The New York Times about the rental battery boom in townships like Tembisa. It describes a barber, Anselmo Munghabe, who was forced to close his shop for a month because the grid couldn’t keep his clippers running. His livelihood—his connection to his community—was severed not by a lack of skill, but by a lack of voltage. Then came the rental batteries: portable, solar-charged blocks of energy that can be rented, used to power a business or a nebulizer or a television, and then swapped out.

“Renting a small battery is far cheaper than buying solar panels and batteries outright. ‘I think this is a game changer,’ said Ifeoma Malo… ‘This is creating inclusiveness in access.'” — The New York Times

There is something profoundly philosophical in this shift from the “macro” to the “micro.” For decades, the assumption was that the state provides the power, and the citizen consumes it. It was a vertical relationship, dependent on the stability of the giant at the top. But as South Africa’s coal-heavy grid stumbles under the weight of age and mismanagement, that vertical trust has broken. In its place, a horizontal, modular resilience is emerging.

This isn’t just about electricity; it is about agency. When you rent a battery for the day, you are no longer waiting for permission to work, to learn, or to breathe. You are uncoupling your fate from the failures of the system. It reminds me of the way the internet decentralized information—now, solar technology and battery storage are decentralizing the very energy of life.

Of course, there is a melancholy here, too. It is an indictment of a system that forces its most vulnerable citizens to pay a premium for what should be a basic utility. And yet, there is undeniable beauty in the adaptation. We see the grandmother powering her TV to stay connected to the world, and the barber sweeping hair from the floor under the glow of an LED strip powered by stored sunlight.

We spend so much time waiting for the world to be fixed from the top down. But perhaps the real story of our time is that we are learning to carry the light ourselves, one heavy, rental box at a time.

Categories
Energy San Francisco/California Texas

Drilling for Redemption

It’s often said that the future arrives in disguise, wearing the hand-me-downs of the past. Nowhere is this more evident than in the scrublands of Texas, where a quiet revolution is taking place—one that looks suspiciously like the old status quo.

A recent New York Times story caught my eye: Not All Drilling in Texas Is About Oil. It details how the Lone Star State is rapidly becoming a hub for geothermal innovation. But here is the twist: they are doing it by repurposing the very tools, technology, and roughneck talent that built their oil empire.

“The state has become a hub of innovation for creating electricity using geothermal power. Just don’t call it renewable.”

There is a profound irony here. For decades, the narrative has been a binary battle: Dirty vs. Clean, Old Energy vs. New. But in Texas, the lines are blurring. The same drill bits that once pierced the earth for carbon are now hunting for heat. It turns out that if you know how to drill deep and manage pressure, you are halfway to solving one of the world’s most sustainable energy puzzles.

Here in California we’ve often prided ourselves on being at the vanguard of the green revolution, yet our own geothermal legacy is practically ancient history. Just north of San Francisco lies The Geysers, the world’s largest geothermal field. It has been quietly churning out electricity since 1960. It’s a marvel of the “old way”—tapping into rare, natural dry steam reservoirs. It was the low-hanging fruit of the geothermal world.

It turns out that what’s happening in Texas is different than at The Geysers. It’s the “hard stuff.” They aren’t just finding steam; they are engineering the earth to release steam, using advanced techniques to crack hot rock and circulate water. It is a technological leap that stands on the shoulders of the oil giants.

There is a beautiful lesson in this convergence. We tend to discard our past selves when we try to grow. We want a fresh start, a clean slate. But true evolution—whether in energy grids or our own lives—rarely works that way. We usually have to use the skills we learned in our “messy” phases to build our cleaner futures.

Years ago California showed us the resource was there. Texas is now showing us how to reach it in more places.