The Economics of Opposition

Mark Green
Posted August 1, 2011

Shell America's Marvin Odum and Alabama mine operator Ronnie Bryant would appear to have little in common. Odum oversees tens of thousands of employees, making decisions that are measurable in the billions of dollars. Bryant has permitting to open a new coal mine that would employ about 125 workers in Alabama.

No question, a galactic difference in scale. But there's at least one common point. Both run businesses that attract environmental attention.

Odum told a U.S. Chamber of Commerce audience last week that a recent lawsuit filed by environmental groups against the government, targeting the federal permitting process, could bring drilling in the Gulf of Mexico to a standstill:

"We are not named in the suit, but we have an interest in how it is resolved - as does every energy consumer in this country. This suit has the potential to virtually halt exploration in the Gulf, serving as a back-door moratorium."

It's not Odum's only concern - he described for the Chamber crowd a regulatory process that is stifling energy investment:

"Even in areas that are in theory open to production, we still face debilitating regulatory red-tape. ... We have participated in federal lease sales off the coast Alaska since 2005 and paid more than $2 billion for hundreds of leases. ... But despite our most intense efforts, we have yet to drill a single well in Alaska. We've been strung along by regulatory and legal barriers and some of these leases are now within four years of expiring. ... We don't need government incentives or bailouts or stimulus to do this. We just need clearance."

Bryant's tale is more poignant and no less instructive. He operates a number of mines near Birmingham and had plans for another - until he attended a public hearing on a separate venture and listened to two hours of people criticizing companies and blaming pollution for causing cancer (h/t to blogger David McElroy, who posted on this here). When Bryant got a chance to speak, here's what he said:

"My name's Ronnie Bryant, and I'm a mine operator ... I've been issued a permit in the recent past for [waste water] discharge, and after standing in this room today listening to the comments being made by the people ... Nearly every day without fail -- I have a different perspective -- men stream to these operations looking for work in Walker County. They can't pay their mortgage. They can't pay their car note. They can't feed their families. They don't have health insurance. And as I stand here today, I just, you know, what's the use? I got a permit to open up an underground coal mine that would probably employ 125 people. They'd be paid wages from $50,000 to $150,000 a year. We would consume probably $50 million to $60 million in consumables a year, putting more men to work. And my only idea today is to go home. What's the use? I don't know. I mean, I see these guys -- I see them with tears in their eyes -- looking for work. And if there's so much opposition to these guys making a living, I feel like there's no need in me putting out the effort to provide work for them. So as I stood against the wall here today, basically what I've decided is not to open the mine. I'm just quitting. Thank you."

For Odum and Shell, legal challenges by environmentalists and government red tape factor into where the company decides it will invest in new exploration and development. For Bryant, a local/regional businessman, there's reluctance to venture forth where it seems he's not wanted. In Bryant's case the effects - potential jobs lost - have individual faces, as he described.

This isn't an argument against laws and processes that protect the environment - just a reminder that these things don't occur in isolation. Everything has its cost.