Low Oil Prices Affecting Louisiana Oil Industry
Usually the news of lower oil prices is seen as good news by most of us as consumers. While paying a little less at the pump is always a good thing lower prices for oil can adversely affect all of us in Louisiana . That's because a good portion of our state's economy is built around the lucrative but not always economically stable oil and gas industry.
How do lower prices translate into real dollars across our state? The Louisiana Radio Network asked Don Briggs, Louisiana Oil and Gas Association President about that.
"For every dollar drop in the barrel of oil on the average price costs the state $12 million. The state receives severance tax and royalties and all kinds of revenue from the industry."
The lower prices also mean that company budgets as well as state budgets have to be scaled back. When companies scale back that means less work and in some cases layoffs.Says Briggs,
"Because you don't spend $80 a barrel if you're getting $70 a barrel. So it's definitely having an impact and companies are looking very hard at their budgets next year."
Briggs told the Louisiana Radio Network that his office has already seen some scaling back of manpower on projects in the works for next year. The goal as he sees it is to reach a price that is good for the consumer and good for producers, that way everybody is happy. Briggs suggests that oil prices in the $70-$80 per barrel range could become problematic for the industry over a prolong period of time.