Declining oil prices negatively impact LA’s economy

Local News

Oil equals cash in Louisiana and right now, that cash flow is low.

Gifford Briggs, the Vice President of the Louisiana Oil and Gas Association says, “Every time the price of oil drops a dollar, that means about $12 million dollars to the state budget.”

Over the last year and a half, the price of a barrel of oil has plunged $70 a barrel. That equals an almost one billion dollar loss in revenue.

“Those are dollars that can’t be spent on education, that can’t be spent on healthcare, that can’t be spent on the services that go out to the community that so desperately need them” explains Briggs.

At the moment, oil costs $35 a barrel. If prices continue to drop, it could widen our state’s $750 million budget hole.

Stephen Barnes, an economist with LSU, says “Oil has fallen primarily because of an increase in supply brought on by advancements in technology that are leading to more productive shale oil drilling.”

While an increase in supply is a good thing, it’s caused nearly half of the rigs in our state to shut down production.

Barnes explains, “Statewide we’ve seen a pretty significant drop off in employment in the oil and gas extraction and support services sectors.”

While falling oil prices may be bad for our state’s economy, you won’t hear anybody at the pump complaining.”

“It’s been estimated that the prices we’re dealing with have put anywhere from $500 to $700 dollars in an average families pocket over the course of a year” explains Briggs.

Briggs says the industry is so volatile, it’s hard to predict when prices may rise again. A lot of that also depends on what happens in the Middle East.

Experts at the Louisiana Oil and Gas Association estimate oil prices could stabilize again in 2017.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Coronavirus Headlines

More Coronavirus