Blowout

1. Oil and Gas: The Most Consequential Industry

I don’t mean to be rude, but I also want to be clear: the oil and gas industry is essentially a big casino that can produce both power and triumphant great gobs of cash, often with little regard for merit.

Global Influence. The oil and gas industry's influence extends far beyond energy production, shaping geopolitics, economies, and even democratic processes. Its immense wealth and power create a system where merit often takes a backseat to influence and access. This industry's impact is so profound that it's essential to understand its workings to grasp the global chaos and democratic downturn we're currently experiencing.

A High-Stakes Casino. The industry operates like a high-stakes casino, where fortunes are made and lost with little regard for ethical considerations. This environment attracts individuals and entities prone to gangsterism, extortion, and thuggery, further complicating the industry's already complex dynamics. The industry's practices have been lumbering across the globe of late, causing mindless damage and laying the groundwork for the global catastrophe that is the climate crisis.

America's Role. The United States, as the birthplace of the modern oil industry, has played a significant role in shaping its culture, tools, financing, and administration. This legacy, while contributing to economic growth and development, also carries the responsibility of understanding and addressing the industry's negative impacts on global politics and the environment. It’s always America.

2. Rockefeller's Standard Oil: A Blueprint for Domination

The organization of the great business of taking petroleum out of the earth, piping the oil over great distances, distilling and refining it, and distributing it in tank steamers, tank wagons, and cans all over the earth,” the president emeritus of Harvard noted in 1915, “was an American invention.

American Innovation. The oil business, as we know it today, was largely an American invention, with John D. Rockefeller and Standard Oil playing a pivotal role. Rockefeller's innovative approach to refining, distribution, and market control set the stage for the industry's future. His success also popularized the idea of America as the testing ground where the extravagant possibilities and the outsized benefits of free-market capitalism have been proven.

Ruthless Efficiency. Rockefeller's strategy involved controlling nearly all aspects of the oil business, from refining to transportation, allowing him to undercut competitors and dominate the market. This consolidation of power, while efficient, also raised concerns about monopolies and the suppression of fair competition. Standard DNA is shot through the oil industry, as are Standard’s dominant traits: a penchant for pinching pennies, an eagerness to devour and expand, a mistrust and even hatred of government regulation, a vaguely delusional sense of higher calling, and a wary respect for innovation.

Beyond Governance. Standard Oil's immense power eventually led to its breakup by the U.S. Supreme Court, highlighting the dangers of unchecked corporate influence. However, the company's legacy continues to shape the industry, with many of today's major oil companies tracing their roots back to Standard Oil. The boundaries of capitalism and democracy in America were still being chalked, the rules of the game still being written.

3. Fracking's Nuclear Roots and the Quest for Energy Independence

Since our society is constantly clamoring for more non-polluting energy, we advocate vigorous efforts to bring the new technology of nuclear stimulation to rapid commercialization.

Atoms for Peace. The pursuit of energy independence in the United States led to some unconventional experiments, including Project Plowshare, which explored using nuclear explosions to stimulate natural gas production. This initiative, while ultimately unsuccessful, reflects the lengths to which the country was willing to go to secure its energy future. The AEC had launched its effort to keep the scientific momentum going, but hopefully in a less deadly direction.

Unforeseen Consequences. Project Rulison, a nuclear fracking experiment in Colorado, demonstrated the potential for both innovation and environmental risk. The project's failure to achieve commercial viability, coupled with concerns about radioactive contamination, led to the abandonment of nuclear fracking. The dire prophecy of the geologist and futurist M. King Hubbert, who said that oil production would hit its apex in around 1970 and then begin a long despair-inducing decline, seemed to be coming true, at least domestically.

Shale Gas Revolution. The shale gas revolution of the early twenty-first century was made possible by hydraulic fracturing and horizontal drilling, technologies that relied on brute force to extract previously inaccessible resources. This breakthrough transformed the global energy landscape but also raised concerns about environmental damage and the potential for man-made earthquakes.

4. Khodorkovsky's Yukos: A Cautionary Tale of Russian Capitalism

Our guiding light is Profit, acquired in a strictly legal way. Our Lord is His Majesty, Money, for it is only He who can lead us to wealth as the norm in life.

Rise of the Oligarchs. The collapse of the Soviet Union created opportunities for ambitious individuals like Mikhail Khodorkovsky to amass wealth and power. Khodorkovsky's success in transforming Yukos into a modern, profitable oil company initially symbolized the promise of Russian capitalism. The Russian experiment once again proved that early-stage capitalism is a poor vehicle for spreading benefits far and wide.

Clash with Putin. Khodorkovsky's growing independence and potential political ambitions put him at odds with Vladimir Putin, who sought to consolidate control over Russia's energy sector. Khodorkovsky’s cardinal sin against the Russian state was being overly successful and overly independent.

State-Sponsored Theft. Khodorkovsky's imprisonment and the subsequent dismantling of Yukos serve as a cautionary tale about the risks of challenging authoritarian power. The seizure of Yukos's assets by the state-owned Rosneft demonstrated Putin's willingness to use the legal system as a tool for political and economic control.

5. Aubrey McClendon: The Fracking Evangelist and Oklahoma's Boom

When the game changed, and acquisition became the key to capturing the greatest values from the unconventional plays, I felt like I had a natural advantage over most [competitors] because I understood how to put together a very formidable Chesapeake land machine to ‘capture the flag’ in big plays.

Visionary or Reckless? Aubrey McClendon was a charismatic figure who championed the shale gas revolution and transformed Oklahoma City into an energy hub. His aggressive land acquisition strategies and embrace of debt, however, also led to financial instability and controversy. He had a mind that people often refer to as persistent,” Mitchell’s son Todd told Gold. “To me it is different than persistence. It was a form of obsession. He has a theme, and he would stick with it and stick with it.”

Oklahoma's Transformation. McClendon's influence extended beyond the energy sector, shaping the city's skyline, economy, and civic identity. His vision of a vibrant, modern Oklahoma City attracted investment and created a sense of optimism and possibility. The locals knew him on sight: he looked like Archie Manning’s long-lost younger brother, with the insouciant, unkempt shock of wavy hair, the soft unthreatening drawl, and the slightly doughy features that all belied a flinty, hard-edged need to win.

Tragic End. McClendon's untimely death, amidst a federal investigation into bid-rigging, cast a shadow over his legacy. His story serves as a reminder of the risks and ethical challenges inherent in the pursuit of wealth and power in the oil and gas industry.

6. The Resource Curse: A Global Tragedy

It’s always wrong to handle stolen goods,” the international economist and former Russian Federation adviser Anders Åslund opined, “and Yukos was stolen goods.

The Paradox of Plenty. The "resource curse" describes the phenomenon where countries rich in natural resources often experience slower economic growth, higher levels of corruption, and greater political instability. This paradox highlights the complex relationship between resource wealth and development. The Russian economy operated on a regime of insiderism, bribery, and coercion,” in the words of the American reporter Peter Maass.

Equatorial Guinea as a Case Study. The story of Equatorial Guinea, where oil wealth has enriched a small elite while the majority of the population lives in poverty, exemplifies the resource curse. The Obiang family's lavish spending and human rights abuses stand in stark contrast to the country's vast oil reserves.

Breaking the Curse. Overcoming the resource curse requires strong governance, transparency, and a commitment to investing resource revenues in education, healthcare, and infrastructure. Without these measures, resource wealth can become a source of conflict and inequality.

7. The 2016 Election: Oil, Russia, and the New World Disorder

At just the wrong time and in just the wrong place, the worst instincts and practices of the most powerful industry on earth mapped onto geopolitics in a way that didn’t just stunt the prospects for success; it turned them monstrous and backward.

Russia's Interference. Russia's interference in the 2016 U.S. presidential election highlights the potential for the oil and gas industry to be used as a tool for geopolitical manipulation. Putin's efforts to undermine American democracy and sow discord were fueled, in part, by his desire to protect Russia's energy interests.

The Weaponization of Information. The Russian campaign involved a sophisticated combination of hacking, disinformation, and social media manipulation. By exploiting existing divisions and spreading false narratives, Russia sought to influence the outcome of the election and weaken public trust in democratic institutions.

The New World Disorder. The 2016 election serves as a stark reminder of the challenges facing democracies in the digital age. The intersection of oil, geopolitics, and information warfare has created a new world disorder, where the worst instincts and practices of the most powerful industry on earth can be used to undermine democratic processes.

8. The Environmental and Social Costs of Unfettered Extraction

As meritorious as clean air, clean water, and clean food may be, the term ‘clean’ must be translated into criteria and standards.

Collateral Damage. The pursuit of oil and gas resources often comes at a significant environmental and social cost. Hydraulic fracturing, in particular, has been linked to water contamination, air pollution, and increased seismic activity.

Human Impact. The health and well-being of communities living near oil and gas operations are often overlooked in the rush to extract resources. Residents may experience a range of health problems, from respiratory issues to neurological disorders, as a result of exposure to toxic chemicals.

The Need for Regulation. The oil and gas industry's history of environmental damage and social disruption underscores the need for strong government regulation. Without effective oversight, the pursuit of profit can easily outweigh concerns for public health and safety.

9. The Power of Transparency and Accountability

It’s always wrong to handle stolen goods,” the international economist and former Russian Federation adviser Anders Åslund opined, “and Yukos was stolen goods.

Shining a Light. Transparency and accountability are essential for curbing corruption and promoting responsible behavior in the oil and gas industry. Requiring companies to disclose payments to foreign governments and to adhere to strict environmental standards can help level the playing field and protect vulnerable communities.

The Role of Whistleblowers. Individuals who expose wrongdoing within the oil and gas industry play a crucial role in holding companies accountable. Protecting whistleblowers and encouraging them to come forward can help uncover hidden abuses and prevent future harm.

Citizen Action. Concerned citizens can make a difference by demanding greater transparency and accountability from their elected officials and from the oil and gas industry. By organizing, protesting, and advocating for change, citizens can help create a more just and sustainable energy future.

10. The Unfolding Future: Energy, Geopolitics, and Democracy

It’s easy to look back on those strange days at the end of September 2003 and identify the warning signs about Putin and Russia that American policy makers missed.

A Crossroads. The world stands at a crossroads in terms of energy policy and geopolitics. The decisions we make today about energy production, consumption, and regulation will have profound consequences for the future of our planet and our democratic institutions.

A Call for Vigilance. It is essential to remain vigilant about the influence of the oil and gas industry on our political systems and to resist efforts to undermine democratic processes. By promoting transparency, accountability, and citizen engagement, we can help ensure that energy policy serves the public interest, not just the interests of a powerful few.

A Shared Tragedy. The way things turned out is a tragedy—a sprawling but explicable tragedy. And it is not Russia’s alone. The saga involves, among other incidents, the purposeful detonation of a fifty-kiloton nuclear bomb eight thousand feet below the earth’s surface (unsettlingly close to an I-70 exit ramp in Colorado); an international financial crisis; a twenty-eight-thousand-ton vessel dragging unmoored and unmanned onto the craggy coast of Alaska; tornadoes; the novelty of man-made earthquakes; murdered cows; and a third-grade public school teacher panhandling to provide school supplies for her students.

Last updated: February 23, 2025