Plummeting oil prices put Louisiana economy in uncertainty
The oil industry is getting hit hard by the novel coronavirus. Oil prices had their lowest drop in U.S. history at over 300 percent with oil futures closing in negative territory for the first time ever on Monday.
"It’s just almost unthinkable and certainly a stressful and tenuous time for those in the industry," said Gifford Briggs, President of the Louisiana Oil and Gas Association. "We have never seen the demand side globally be as upset as it is. We have lost 30 million barrels per day in the month of April."
As a result, you may see lower prices at the pump, but experts say it's a bad trend for Louisiana’s economy.
"We can expect to see production being shut in across the state and that $400 million impact to the state budget will grow exponentially as people are laid off," said Briggs.
The state's economy is already in murky waters because of COVID-19 and the recent drop in oil prices adds a new level of uncertainty.
"On top of everything else it's something that makes us unique from other states that are going to be coming back from the pandemic in that we are going to have an oil industry that we have relied upon so much that is going to be another challenge for us to work on," said State Rep. Mike Johnson, R-District 27.
Rep. Johnson said with the price drop, less people are working now and the state will be collecting less tax revenue. Johnson said that could potentially put the state's budget in dangerous territory.
"So you have less income coming in and more expenditures going out,” said Rep. Johnson. “So I think we are going to be looking at budgetary issues at this point but we don't even know what they are yet."
"When are people going to be able to travel and take cruise ships and airplanes and go to Disney and do all those things that we are accustomed to doing because all of that plays a major role in the demand for oil,” said Briggs. “All we know is the sooner we can get back to where we were in December, the better it's going to be for the industry."
In the meantime, the Louisiana Oil and Gas Association said they are lobbying elected officials for a reduction in severance taxes and legal relief in current coastal lawsuits.
President Donald Trump also reacted to the price drop on social media. He posted this statement on Facebook:
"We will never let the great U.S. oil & gas industry down. I have instructed the secretary of energy and secretary of the treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!"