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Aubrey McClendon Changed the World

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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When entrepreneurs upend the business world with new products or ways of doing things, they're often widely celebrated. This is the case even if they have rough edges or follow ruthless business practices (Steve Jobs being a classic example of the former, Bill Gates of the latter).

Oil and gas entrepreneurs tend not to get this icon treatment. As Wall Street Journal energy reporter Russell Gold wrote in his 2014 book, “The Boom: How Fracking Ignited the American Energy Revolution and Changed the World”:

Americans like our abundant energy, but not the men who provide it.

That's the opening line of a chapter about Aubrey McClendon, the shale-oil and -gas pioneer who died in a fiery car crash Wednesday, the day after he was indicted for rigging bids on oil and gas leases.

Until he was pushed out by disgruntled investors in 2013, McClendon led the company that led the fracking boom, Chesapeake Energy. Hydraulic fracturing (that's what fracking is short for) and other new drilling technologies allowed the U.S. to start exporting oil again, upended global oil markets and spelled the end of coal's long, dirty reign as the country's main source of electrical power. (Natural gas was still slightly behind coal in electricity generation for the full year 2015, but it's been ahead every month since July, and its lead has been growing.)

This wasn't all McClendon's -- or Chesapeake's -- doing, of course. Texas oilman George P. Mitchell, who died in 2013, is generally credited with figuring out how to profitably extract oil and gas from shale, and other individuals and companies played big roles in the subsequent shale boom. But McClendon was what Gold on Wednesday called the "chief apostle" of fracking. Or as Ben Casselman, a former Wall Street Journal energy reporter, who now covers economics for FiveThirtyEight, wrote as part of a tweetstorm (you can read the whole thing here):

and

McClendon, then, was a bold visionary who actually saw his vision realized. In Gold's telling, he was also a pretty appealing character: an unusual combination of a voracious reader, a sophisticated thinker and the life of the party. He came home to Oklahoma City after getting a history degree from Duke University in 1981, and following a brief stint at a small, struggling oil company owned by his uncle, he struck out on his own buying and trading oil and gas leases. He was from a prominent local family -- a great-uncle had founded the well-known oil and mining company Kerr-McGee -- but his success in the industry was largely self-made.

There was a dark side as well. McClendon was a profligate spender of his company's money and a reckless gambler with its fortunes. He was also, according to federal prosecutors, a violator of antitrust laws (he was charged with colluding with other bidders to drive down prices of oil and gas leases).

He certainly wasn’t the first successful businessman to be accused of violating antitrust laws. You may recall that Apple and Microsoft both lost big antitrust cases without doing lasting damage to the reputations of Jobs or Gates. Then again, Apple and Microsoft have remained two of the world’s most profitable, valuable companies, while McClendon didn’t leave Chesapeake in that kind of shape. It’s still the second biggest U.S. natural-gas producer (after Exxon Mobil), but it recently reported a net loss of $14.7 billion (on revenue of $13.5 billion) for 2015 and was the year's worst performer among companies in the Standard & Poor's 500 Index.

That’s one reason why airport bookstores aren't full of how-to-be-like-Aubrey-McClendon manuals. Another is that drilling holes in the ground just doesn’t generate the kind of admiration and emulation in the broader public that building technology companies or even discount-store chains does. Yes, T. Boone Pickens had a bestseller a few years back, but he transcended his oil-wildcatting roots long ago.

Still, I'm having trouble thinking of any other person who has had as much impact on the global economy over the past decade as Aubrey McClendon. Lots of people these days say that they want to change the world. He actually did.

  1. Apple has appealed the decision to the Supreme Court. There's been no word yet on whether the court will hear the case. An appeals court overturned parts of the U.S. District Court ruling against Microsoft, and the company settled with the Justice Department in 2001.

  2. Yes, I realize that Jobs was dead by the time the Justice Department filed suit in 2012. But the case involved decisions made while he was running the company.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Zara Kessler at zkessler@bloomberg.net