Hakoda investigates the nationalists' hideout, only to discover it abandoned with a note informing him that he will soon see the truth. Elsewhere, Katara and Sokka learn from Malina and Maliq that, as part of the redevelopment process, they will be extracting from a massive oil reservoir recently discovered in the Southern Water Tribe, in order to enable a new age of machinery in which machines become part of everyday life. Katara continues to have issues with Malina and her relationship with Hakoda, owing to her plans and unintentionally offensive remarks towards the South. Further conversation reveals that Malina and Maliq are business partners of Toph's father, with Toph herself later arriving as a representative of her father.
At a festival thrown by Malina and Maliq, Katara and Sokka meet up with Aang, who has returned from helping to solve the crisis in the Fire Nation. As Malina makes a speech about her plans, the festival is attacked by Gilak's nationalists, with Gilak accusing her and Maliq of attempting to seize the oil for the Northern Water Tribe, in order to make the Southern Tribe a puppet state of the North. As proof, he cites the documents that were stolen from Maliq. Malina admits that she had originally planned to give the oil to the North, out of fear the South would be unable to handle it properly, but changed her mind upon meeting Hakoda and seeing that the South was capable of doing so. Maliq however insists that they carry on with the original plan, decrying the South as culturally backwards and incapable of governing itself, let alone managing the oil.
Malina agrees to step down from the redevelopment project and leave the South Pole with all her people in an attempt to defuse the situation, but Gilak and the nationalists attack. In the ensuing battle, Thod reminds Katara of the story he told her, comparing the humans' treatment of the snow rat to the North's low opinion of the South, to convince her to join Gilak, but she refuses. Later on, Hakoda attempts to persuade Gilak to give up his crusade, but Gilak stabs Hakoda in the chest before he and his men are captured. The night following the battle, Sokka and Katara briefly argue over the South's future, Sokka pointing out that Malina and Maliq's plan of using the oil has merits, Katara unwilling to allow the South to lose its cultural identity. Elsewhere, as Gilak sits in his prison cell, one of Hakoda's officers smuggles him the key to his cell door, having been convinced of his opinions.
