What Is The Black Cascade?

On the collision of the supply chain crisis with the energy crisis.

I grew up in the nineties and entered my adolescence in the twenty-first century’s opening decade. At some point, I remember seeing copies of Thomas Friedman’s The World Is Flat appear in friends’ living rooms. The logstics revolution, containerization, and globalization had made irrelevant domestic manufacturing concerns, we’d been told. The orthodoxy was that it mattered not whether nations made microchips or potato chips, as long as they sold. Doubters could scoff and be damned. Critics found themselves pushed behind the tree line.

But the drive for greater efficiency in just-in-time kanban production started to strain the system. When COVID came on the scene it exploited vulnerabilities decades in the making. Suddenly, it seemed it does matter whether a nation made microchips or potato chips. Our supply chains were overoptimized, dessicated. Many who presided over the orthodoxy found themselves standing around winding their asses and scratching their watches, baffled at the world they’d built.

You can’t spin ship on a dime. Almost two years later, we’re still seeing the same problems. Cargo containers off the port of LA idled for weeks (mercifully, it appears to be easing) and consolidation in the shipping industry seems like it might prolong such problems. Farmers in the Midwest can’t get the component parts they need. And, after decades of high attrition and poor working conditions, the trucking industry has begun harvesting its poisoned fruit. This far-from-exhaustive list of difficulties are driving up the cost of goods. And spells trouble for the future.

We talk of this crisis as if it sits in its own discrete chamber. If it did, everything above this paragraph could be see as “the good news.” But if you think that’s bad…

As Isaac Orr says, “Energy is the secret ingredient in everything.” As this supply chain crisis has ebbed and flowed for the last year and a half, we’ve been marching headlong into an energy crisis. NB readers are likely already initiated in the basics of the information but in brief: a post-covid demand resurgence met with an overinvestment in unreliable renewables and disinvestment in fossil fuels, wind droughts, depleted fossil fuel storage, bans on fracking, shifts in investor behavior in the fossil fuel sector have produced a crisis.

So, we’ve seen the prices of polysilicon spike as China has encountered coal shortages, ammonia plants have been halted or curtailed in Europe and the UK (big trouble for the fertilizer industry and thus for the agricultural sector), truck stops in America are rationing diesel, and everyone seems to be crossing their fingers that it’s a mild winter. Black outs and brown outs will imperile the public and short-circuit economies, spawning more interruptions in the production and flow of goods.

Putting this all together we can see how problems from the supply chain crisis can cascade into the energy crisis and vice-versa.

That dynamic is what I’m calling the Black Cascade.

If it gains a head of steam, then it will create bigger and more complicated problems for us to solve. I don’t want to be a Cassandra or say that I know what’s coming. I’ve just noticed an unfolding dynamic that seems to be slipping under the radar, which worries me.

If anyone with more expertise has better/more analysis, or can refine my observations, please feel free to comment below.