Blowout by Rachel Maddow

he very idea of it was too implausible, too fantastical, to be believed; it was simply too outlandishly grand even for a grand opening. A visiting head of state, one of the most powerful men on the planet in the autumn of 2003, had announced his intention to be on hand to christen a tiny new franchise operation on the frowsy little corner of West 24th Street and Tenth Avenue in Manhattan.

The world potentate was in the middle of a three-day swing through New York City, on his way to a one-on-one summit with George W. Bush at the American presidential retreat, Camp David. He had spent the past few days in the august citadels of power, money, and meaning in New York; had taken private meetings with the president of France and the chancellor of Germany in his private suites at the Waldorf Astoria hotel; had delivered a widely anticipated address to the General Assembly of the United Nations; had fielded earnest questions about the benefits and the perils of democracy from scholars at the city’s premier university; had bowed his head in prayer alongside religious leaders whose brethren had long ago been exiled from their shared home country; and had laid a bouquet of red carnations at a temporary memorial to the 343 New York City firefighters killed just two years earlier in the 9/11 attacks. The New York Daily News reporters thought they had detected an actual tear slide down the presidential cheek as he placed the floral remembrance for the dead American heroes. Now the world leader was going to veer off this power slalom to preside over the grand opening of a business with a few hundred square feet of retail space, valued in its recent purchase at $55,000?

 

As the hour of the scheduled grand opening in the increasingly gay New York neighborhood of Chelsea neared, he was meeting with two dozen captains of American industry in the cavernous banquet room of what might well be considered the Royal Palace of International Capitalism—the New York Stock Exchange. Heads of the largest companies in America were on hand; the CEO of the most profitable company in the history of the modern world, ExxonMobil, had flown in from Texas to be among the interlocutors. All of which appeared to please the guest of honor. “We have been surrounded by a very kind and warm atmosphere almost everywhere we have been in New York,” was his opening message, as translated to the industrial barons through the elegant headset provided to each. “It is this direct contact that allows all of us—both politicians and entrepreneurs—to open new possibilities and spheres for wide cooperation.”

Three miles north, meanwhile, at 24th Street and Tenth Avenue, as the security team began to shut down surrounding streets, shoo away the occasional Rollerblader, and tape off a makeshift pen for the growing press contingent, the store’s attendants readjusted their new red shirts and ball caps. Among the curious onlookers at this unfolding scene, skepticism reigned. “Nobody thinks he will come,” the store manager confided to one reporter. “We are telling people. They say, ‘No way.’ ”

But then, at around two o’clock in the afternoon, there was a wail of sirens from the south, and a boxy Eastern European–style armored limousine tucked in among a phalanx of armored vehicles came into view. The small crowd of people who craned their necks and stared south toward the motorcade also noted the sudden appearance of the senior U.S. senator from the great state of New York, there to greet the arriving limousine. This was really gonna happen. The attendants and managers readjusted their shirts and ball caps one final time. The counterman checked again to make sure that the coffee was hot and the doughnuts were arrayed in comely fashion. By the time the honored ribbon cutter emerged from behind the steel curtain of armed and armored security and walked toward the gas pumps and cash registers, local reporters were already rehearsing their ledes. “In possibly the greatest show of political power ever to attend the grand opening of a gas station,” the New York Post would offer, “Russian President Vladimir Putin showed up in Chelsea yesterday with Sen. Chuck Schumer to help inaugurate the first Russian-owned chain of petroleum stops in America.”

 

The Post’s rival tabloid, the New York Daily News, countered with “Fill ’er up, Vlad,” under the headline “No Fueling, That’s Putin.”

There was a hint of pride in Vladimir Putin’s open, shoulder-swinging gait as he strode across the gas station lot to shake hands with the five nervous-looking attendants, who could now be officially counted among the ranks of Moscow-based OAO Lukoil’s 120,000 employees. Their uniforms, President Putin must have noted, were snappy and vibrant and matched the rest of the station decor—power red! The day was overcast and the sky wan, but the nearby credit-card-ready gas pumps gleamed under lights recessed in the new high canopy built to shield customers from the vagaries of weather and to dispense retardant chemical foam in the event of a gasoline fire.

The franchisee of this station, Paramgit Kumar, was in his glory too, and all thanks to Lukoil, the largest and most profitable oil company in Russia, a country second only to Saudi Arabia in daily production of crude. Lukoil claimed more proven reserves of oil than any publicly traded company on earth and had taken up its position at the point of the flying wedge of Russia’s entry onto the new world order’s wide-open field of commerce. The corporation had emerged from the dank, state-run ruins of the Soviet Oil Ministry into the bright lights of free-market capitalism, a fact recently confirmed by the company’s official listing on the London Stock Exchange. Another first for Russia! Share prices of Lukoil had risen from $3.54 to $24.55 in just four years. Revenues had jumped from $15.5 billion to more than $22 billion in the previous year alone. Western bankers had enthusiastically stuck their heads into the scrum for the chance to win enormous fees for trail-bossing Lukoil’s $775 million public stock offering.

Lukoil had used a wee bit of its new Western-fed capitalization to acquire the moribund Getty Petroleum Marketing Inc., with its thirteen hundred gas station properties dotting the Eastern Seaboard of the United States. That made it the first Russian company to own an American company listed on the New York Stock Exchange. And that meant that some of the Lukoil shine had fallen on Mr. Kumar. He had been one of the first operators to grab his new parent company’s offer of a loan guarantee—at way-below-market financing—to upgrade his seedy little Getty station. “[My] station is a piece of junk,” one fellow Getty operator complained. “My pumps are about fifty years old.” The cash infusion allowed Kumar to upgrade his pumps, his flame-retardant canopy, his Kwik Farms minimart, and his color scheme. Power red! You could see it ten blocks away. So what if the Lukoil name was new to his customers and kind of foreign sounding. The makeover and rebrand meant he had it all over his nearest competitors—ExxonMobil, Hess, and Gaseteria. “There aren’t too many gas stations in New York City that are new and attractive, so we stick out,” Kumar would boast to a reporter from Convenience Store News. “Plus, now we have a convenience store as well, which brings in gas customers and customers just walking by on the street.”

 

Schumer had to walk quickly to stay at the shoulder of the Russian president as the two men were escorted under the new canopy, past the giant flowerpots teeming with chrysanthemums, toward the convenience store tucked back in the corner of the lot, under the hulk of what used to be elevated train tracks. Putin kept his head bent away from Senator Schumer as he made his way toward the soda-pop-and-cigarette wiles of the Kwik Farms. The Russian president was instead listening intently to the gentleman on his right, a beefy executive in a dark suit, with a head of gray hair cropped tight and neat in the old Soviet military style. This was the CEO of Lukoil’s worldwide operation, Vagit Alekperov, who had flown in from Moscow for the opening.

Alekperov was a welcome sight for Putin, a man he knew he could count on. There were other tycoons back in Moscow more able in the area of high finance, more schooled in the Western-style corporate governance that international investors now demanded, and more adventurous in developing and deploying expensive new technologies for extracting crude oil and natural gas from Russia’s vast and waiting reserves. But there were risks in being too keen. Putin had seen too many Russian businessmen whose heads had been turned by the enormous financial possibilities in oil and gas, who had become eager to invite American and British oil majors in to develop the Russian fields. He worried men like that might accidentally give away the store. But Vladimir Putin did not worry about Vagit Alekperov, who had come up among the roughneck ranks in the Soviet oil fields in Azerbaijan, managed fields in western Siberia, and served as the youngest-ever deputy head of the Soviet Ministry of Energy when it was overseeing production of more barrels of crude per day than any country in the world, single-handedly meeting the U.S.S.R.’s daily energy needs, financing the Soviet government and its ruling Communist Party, and providing both energy and necessary cash to the worldwide span of Soviet satellites and friends.

 

By 2003, of course, the Soviet Union was no more, but Alekperov retained his sense of mission from the old superpower days. He was still a dedicated patriot. Russia’s coat of arms enjoyed a place of pride on his office wall back in Moscow; a black-and-white headshot of Vladimir Putin was the lone photograph on his orderly titanium-and-glass desk. The imperatives of the Russian Federation and its president were never far from mind. The move into the retail gas market of the United States, for instance, was likely to be a losing financial proposition for Lukoil, but Alekperov understood that his duties as CEO of the country’s largest oil company were not merely fiduciary. He understood the geopolitical and symbolic importance of this move into the American market, and he understood the need to support the aims of the Russian president. “It is impossible to divide the interests of a country and a company that works on its soil,” Alekperov told the American reporter Peter Maass, who was working up a profile of the oil baron for The New York Times Magazine. “Our interests are the same. What’s good for Russia is good for the company.”

Alekperov had been on hand at the New York Stock Exchange just an hour before his arrival at the gas station and had heard Putin sing his song of Russian success to a handful of America’s corporate luminaries. “In the first half of this year, in comparison with the equivalent period last year, the volume of GDP increased by 7 percent, industrial production by 6.9 percent, and investment by almost 12 percent,” Putin told the group. Russia’s economic growth topped world averages year after year, he boasted. “It must be noted that the results achieved are not just thanks to the favorable internal economic situation but also growing entrepreneurial and investment activity. These figures can be attributed to the structural reforms taking place in Russia and the general improvement of the business climate in the country.” Putin went on to reiterate his recently announced goal of doubling Russia’s GDP in the next decade.

 

“I am certain that the personnel, scientific-technical, and rich natural potential of the country, combined with new economic and civic freedom, should give us the desired result,” Putin said. “I am certain that we have every justification to also expect a breakthrough in Russian-American business partnership.”

The cornerstone for the construction of that international partnership was to be oil and gas. Which meant Russia’s Lukoil beachhead on that unprepossessing corner in Manhattan was more than just a gas station. More, even, than a gas station with a Kwik Farms convenience store. Sometimes sharing coffee and Krispy Kreme doughnuts—“He ate a glazed,” Schumer told reporters about Putin—can portend something bigger. Was this little chat and chew the time and place where the Cold War would commence its final, satisfying melt?

President Putin was there at the gas station in 2003 to convince all New Yorkers, and all Americans, that Russia could deliver stability and reliability at a time when America really needed that, or at least craved it. It had been just a few months since the U.S. military had toppled Saddam Hussein in Iraq, and Americans were becoming once again attuned to the danger of being too dependent on Middle East–dominated OPEC, which supplied nearly half of America’s crude oil and seemed to be able to control prices at will. American consumers had watched helplessly at the end of August, in the waning weeks of summer vacation, as gas prices at the pump skyrocketed at the fastest rate in nearly fifty years. Los Angeles had absorbed a 30 percent hike; in Phoenix, it was 40 percent. American consumers were paying more than $2 a gallon for the first time ever.

There were other factors at play, but some Americans apprehended this price hike as an OPEC plot, payback for putting American boots on the ground in a sovereign state in the Middle East. The announcement that OPEC would cut production by nearly a million barrels a day—made just a few days before Putin’s arrival at the Kwik Farms doughnut counter—seemed to confirm the fear. American gas prices were certain to keep going up, at least as long as OPEC had us on such a short leash. Thank God for Russia. Thank God for the honeypot of known oil reserves in western Siberia, not to mention the vast untapped reserves off Russia’s Arctic shelf. Lukoil had five Arctic-ready, icebreaking oil tankers on order at that very moment—an investment of nearly $200 million. And Vladimir Putin had pronounced himself ready to provide America’s new not–Middle Eastern fuel supply, indefinitely, in exchange for a little help with the much-needed modernization of the Russian oil sector.

 

There was already a plan afoot, worked out among the energy pooh-bahs of the Bush and Putin administrations. U.S. companies would help finance a new pipeline from the oil fields in western Siberia to the Russian port city of Murmansk, as well as new storage tanks there and improved deepwater facilities commodious enough for big tankers to maneuver in and out. The Russian military would give over some of its submarine berths to accommodate the big ships, and Russian oil companies would load up those oil tankers for shipment straight to the American market. Putin thought that Russia could be supplying 10 percent of U.S. oil imports before George W. Bush finished his second term in office. Maybe more. There was also talk of constructing a special new facility for exporting liquefied natural gas to America. “It’s not just oil,” Bush’s deputy secretary of energy had said on a reconnaissance visit to Murmansk. “Natural gas is also going to be an important factor in our energy relations.” Just two days before Putin arrived in New York, at the second annual U.S.-Russia energy summit in St. Petersburg, the U.S. energy secretary, Spencer Abraham, proclaimed that the United States was now prepared to “assist Russia as her role in the global energy market increases.”

Even skeptical Russia watchers in America were tuning in to new possibilities. An ascendant American scholar of modern Russia—the future U.S. ambassador to Moscow Michael McFaul—was just beginning to take the measure of the new Russian president and had already warned of the risk that Putin would evolve into an autocrat who monopolized control of government and the economy behind the window dressing of democratic institutions. But despite long-range concerns, the week that Putin was in New York had McFaul feeling optimistic. He told the members of the U.S. House subcommittee charged with keeping an eye on Europe that the Russian president and his key deputies no longer seemed to view America as an implacable enemy bent on emasculating Russia. That old antagonistic perspective, McFaul said, is no longer “the dominant view among foreign policy elites [in Russia] and is most certainly not the orientation of Putin and his government.” McFaul even went so far as to voice the possibility of the most felicitous of outcomes: “If Russia consolidates a liberal democracy at home, then I have no doubt that Russia will develop into a reliable and lasting ally of the United States in world affairs.” And Putin might be just the man to do it; at the very least, he seemed to be embracing the idea of Western-style capitalism: “Since becoming president, Putin has done much to accelerate Russian economic reform.”

 

Maybe that kind of optimism about Putin had been buoyed by the story that had run the previous week in The New York Times about Paul McCartney’s recent visit to Moscow. The old Beatle, there to do a concert and film a television special called Paul McCartney in Red Square, had been summoned to a private audience with President Putin, who walked him into his inner sanctum, dismissed his interpreter, and carried on a conversation in rather serviceable English. “He was fun,” McCartney told Bill Carter from the Times. “He said, ‘I really know your music.’ He agreed the Beatles had been a force for freedom.” Putin even showed up in person for McCartney’s Moscow concert—McCartney played a second iteration of “Back in the U.S.S.R.” just for him, and the crowd didn’t mind one bit.

The week after that heart-warmer ran in the Times, Putin, Alekperov, and Schumer stood inside the Kwik Farms amid the doughnuts and soda pop and potato chips, the heat lamp on the hot dogs radiating a gentle warmth against the old Cold War chill. They didn’t linger too long; there was the press corps outside, after all, waiting for a statement. Yet when the three men walked out and settled in front of the fuel pumps to address reporters, Putin demurred and said nothing. That reticence was unexpected; this was a photo op and a press availability, wasn’t it?

Putin’s reserve that afternoon on Tenth Avenue might have had something to do with a brief but unsettling interaction at the New York Stock Exchange, just before his visit to the Lukoil station. The Russian president had been whisked into a side room for an audience with ExxonMobil’s CEO, Lee Raymond, a meeting laid out in spectacular detail in Steve Coll’s book Private Empire. Raymond, who seemed to believe that his position as head of the world’s most profitable corporation made him approximately equal in power and stature to the president of the Russian Federation, appeared to have rattled Putin. Putin was aware that ExxonMobil had been negotiating to buy a 30 percent stake in Russia’s most impressive up-and-coming privately held oil company, Yukos—a company that might one day challenge Lukoil as Russia’s biggest producer of crude. What Putin did not fully appreciate before his talk with Raymond, however, was that ExxonMobil was in the habit of getting final say in all of its partnership ventures. In Coll’s vivid sketch of the meeting at the stock exchange, Raymond asked for an assurance from Putin that ExxonMobil would one day be permitted to acquire a majority stake in Yukos. He more or less demanded it as a condition for moving forward. “I need to have an understanding of our ability to get to fifty-one percent,” Raymond told Putin.

 

“That means if I want to have Yukos do something, I’m going to have to come and talk to you?” Putin asked.

“Yeah, that’s not so awful,” Raymond told him. “That’s true in a lot of places in the world.”

Coll detailed the aftermath of the meeting also: Raymond would report back to the home office in Texas that his meeting with Vladimir had gone swimmingly and that the ExxonMobil-Yukos deal was on track. Putin saw it differently. He had been offended by the American executive’s arrogance. According to Leonard Coburn, a U.S. Department of Energy official who understood the enormous strategic importance of the Russian oil industry to the country itself, Putin had also been “a little scared.” The Russian Federation president found himself in a bind. Without the weird parallel Soviet economic netherworld that had channeled and shielded Russia’s oil and gas bounty, his country’s economic future was in uncharted territory. The way things were going, the post-U.S.S.R. Russian economy would basically be entirely dependent on its oil and gas industry’s ability to compete in the world market. By 2003, that meant Russian oil companies urgently needed both money and technology from the West to modernize and compete. It might have been dawning on Putin, under that bright red Lukoil canopy in New York in September 2003, that in allowing Russian businessmen—even patriotic Russian businessmen—to do business with ExxonMobil and BP and Chevron and Shell, he risked losing his iron grip on the industry that provided the lifeblood of the Russian state.

 

Whatever the cause, Putin chose not to employ that rather serviceable English for the enlightenment of the reporters outside the Kwik Farms. He stood silent and nodding, with a bloodless, pursed-lip smile on his face, while Vagit Alekperov offered the sort of brief, heavily accented, to-the-point statement that makes Americans think of the cartoon characters Boris and Natasha: “Through today’s action, America will have a new source of energy.” Senator Schumer was more voluble about the potential partnership symbolized by the Lukoil–Kwik Farms team, five of whom were standing just over Schumer’s shoulder, red ball caps ablaze. Together, the senator suggested, Russia and America were going to take on the bully. “I hope it does cause problems for OPEC,” Schumer said. “I hope OPEC is hurt by this so they don’t have a stranglehold on the oil market anymore.” Having spent about ten minutes on-site, Putin was then swept up into his armored motorcade, and he and his entourage sped off toward the summit at Camp David.

It was hard to tell just what the local civilians who had happened onto the scene made of the entire Lukoil grand-opening exercise. Some were distracted by the curtains in Putin’s limo, one by a full-on machine gun he was sure he saw mounted in one of the SUVs in the Russian motorcade, others by the Russian president’s physical stature. Putin was, well, surprisingly tiny. “Diminutive” was how the New York Post put it. And yet he struck one woman, even in his diminutiveness, as “rather totalitarian.” Leave it to that paragon of workingman’s New York, the taxi driver, to offer up the most clear-eyed and incisive take on the strange event. “I know nothing about [Putin],” the cabbie said idly, while filling up his tank at the new Russian-owned pumps. “If he’s going to put the gas cheap, then I’m going to know about him.”

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We all know how it turned out, looking back from the vantage point of 2019. In the end, Vladimir Putin didn’t ever put gas cheap. After a ten-year life, the once-celebrated Lukoil station at 24th Street and Tenth Avenue is no more. The property had a brief run as a public art installation called Sheep Station. “Set in a surrealist landscape amidst the existing industrial gas station architecture,” the exhibition brochure explained, “the sheep symbolize [François-Xavier] Lalanne’s mission to demystify art and capture its joie de vivre.” Today, the lot is home to a glass-and-chrome luxury residential building with an art gallery on the ground floor. Twelve stories housing six $15-million-and-up condos. The condo complex is called the Getty. It skipped a generation, in other words; it was a Getty station before it was a Lukoil station before it was condos, but Lukoil has been wiped from public memory. Hopes for a world-changing American-Russian partnership—the canopy to protect us all from the vagaries of the international and political weather—have long since crumbled. As has the idea of Vladimir Putin as a force for global stability.

 

Turns out Putin made mistakes over the past fifteen years—big, fundamental, hard-to-reverse mistakes. That can happen when you try to build your country’s future on the oil and gas industry. Putin’s decisions stripped his country of its ability to compete fairly in the global economy or global politics and limited its strategic options to the unsavory list he and his apparatchiks are ticking down today. His efforts to restore Russia as a world-stage superpower no longer depend on capacity and know-how. They depend on cheating. Putin and his minions cheat at the financial markets. They cheat at the Olympics. They cheat at their own fake democracy. They cheat other people out of their democracies.

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. But it would be unfair to them and unfair to history to do so without recognizing that the way things turned out was not inevitable. There really was the spore of a bright new future in 2003. And it is certainly true that Russia itself had the resources and the capability to go in another direction. That things turned out as they did is a tragedy—a sprawling but explicable tragedy. And it is not Russia’s alone.

I believe there is one narrative thread that stitches together the greater part of that tragedy—a thread that wraps its way around the globe: from Oklahoma and Texas and Washington, D.C., to London, Kyiv, Siberia, Moscow, Equatorial Guinea, and the Alaskan Arctic; from the Arbuckle formation deep in the earth’s crust to the icy surface of the Arctic seas; from a Malibu mansion stuffed with the world’s largest collection of Michael Jackson memorabilia to a thousands-of-dollars-a-night luxury hotel in central London to a divorce court in Oklahoma City to a crappy office building offering its workers a “Free Power Supply!” in St. Petersburg, Russia. 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. Even an inept Russian spy ring ferreted out of suburban tract houses in New Jersey and Virginia. Even Russia’s interference in the 2016 U.S. presidential election. Seems unlikely, but it all ties.

 

The motive force of all the action—its fuel as well as its engine—is the most consequential, the most lucrative, the most powerful, and the least-well-governed major industry in the history of mankind. Oil and gas. I do not propose to discount or minimize the powerful and positive effects the producers of our hydrocarbons have had on our own country and on the world at large. I like driving a pickup and heating my house as much as the next person, and the through line between energy and economic growth and development is as clear to me as an electric streetlight piercing the black night. But the political impact of the industry that brings us those things is also worth recognizing as a key ingredient in the global chaos and democratic downturn we’re now living through.

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. That equation invites gangsterism, extortion, thuggery, and the sorts of folks who enjoy these hobbies. Its practitioners have been lumbering across the globe of late, causing mindless damage and laying the groundwork for the global catastrophe that is the climate crisis, but also reordering short-term geopolitics in a strong-but-dumb survival contest that renders everything we think of as politics as just theater. It’s worth understanding why. And why now.

 

In the past twenty years, a technology-driven accelerant has been poured onto the fires of an industry that was already pretty good at burning up whole national economies and hopes of democratic governance. One signal (and unplanned) consequence of this earth-shattering leap in oil and gas production is that it stranded Russia economically and strategically, in a way that has driven Russia’s leaders to distraction—and beyond. With no option now to retreat within the controlled global order of Soviet satellite states, Russia’s one essential industry today has to keep up even with the West, even with the democracies. Putin knows Russia can’t do it alone, but it also won’t do it together—not if it has to be on the West’s terms. And so the West’s terms must be changed. Behold the new world disorder. Behold the foreign trolls in your Facebook feed. 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.

This book won’t catalog the whole slimy slick that the oil and gas industry has left behind it all over the world. Think of it as more of a guided tour of some of the landmarks, like Oklahoma, and Equatorial Guinea, and Russia, of course. But naturally—gnash your teeth all you want, Vlad—it all starts right here in America. It’s always America.