Peter A. Coclanis
September 16, 2016
In Giants of Enterprise (2001), historian Richard Tedlow argued that many famous entrepreneurs suffered derangements that were integral to their successes. Steve Jobs, Henry Ford, and Revlon creator Charles Revson all qualify. The unfortunate case of Aubrey McClendon, the colorful energy-sector entrepreneur and fracker extraordinaire who died in a car crash in Oklahoma City in March at the age of 56, offers a recent, compelling illustration. McClendon’s role in the fracking revolution qualifies him as one of our era’s most important entrepreneurs.
McClendon did not invent fracking, but his innovations made it profitable. Recognizing shale oil’s potential early on, he convinced landowners and wildcatters that hydraulic fracturing and horizontal drilling were feasible and cost-effective, making his company, Chesapeake Energy, the biggest player in the industry.
Fracking, though controversial, has undeniably transformed American energy production. Increasing our domestic oil and gas output has weakened international producers, particularly despots and dictators who happen to run resource-rich nations. Cheaper gasoline is popular in and of itself, the more so when drivers know that fewer greenbacks are going into the pockets of Vladimir Putin and OPEC.
Better still, natural gas is much friendlier to the environment than coal, which is increasingly being displaced in U.S. electricity generation. Yes, horizontal fracturing causes some environmental problems—the methane released during extraction, for example, is responsible for a rising number of small-scale earthquakes—but ones that are manageable and solvable. Improved methane-capture technology and better approaches to wastewater disposal are coming, and industry, consumers, and the government have every reason to facilitate their adoption. Intellectually honest environmentalists should give some credit to Aubrey McClendon.
McClendon, like most of us, had feet of clay: conflicts of interest, price fixing, collusion, etc. Some of this may have been the fallout from his obsession to make fracking viable. Could that determination be considered a “derangement?” But derangement as “a disturbance in the regular order or arrangement of parts in a system,” or derangement as “insanity”? Or both?
Normal, stable, non-deranged people probably wouldn’t be able to overcome all of the obstacles standing between the status quo and transformational entrepreneurial breakthroughs. Even the stalwart Wilbur and Orville Wright were a couple standard deviations away from normal human behavior. McClendon was less transformative than some of Tedlow’s other entrepreneurs—he’s no Wright brother or Sam Walton—but like Michael Milken in the 1980s, McClendon was a revolutionary. Fracking disrupted energy markets in much the same way that junk bonds disrupted financial markets in the 1980s. On balance, such disruptions have done far more good than harm.
McClendon, who graduated from Duke University in 1981 with a B.A. in History, ranks with Melinda Gates (class of 1986) as the most important and influential Duke alumni of that decade. McClendon was also among the most generous. He and his wife Katie (class of 1980), donated many millions to their alma mater. As a professional historian, located down the road from Duke at UNC Chapel Hill, I have no trouble saying that the tangible benefits generated by this one holder of a bachelor’s degree easily exceed those produced altogether by the PH.D.’s of many large history departments.