Dr. Loren Scott: Future Price Of Oil Up In The Air [LIVE UPDATES]
Before a crowd of motivated Acadiana business leaders, economist and LSU economics professor Dr. Loren Scott gave his outlook on the Louisiana economy. Generally, the news is better for the State of Louisiana. Dr. Scott is the featured speaker at OneAcadiana's Entree to Business Breakfast at the Doubletree on Pinhook in Lafayette.
Top of mind: the Louisiana oil and gas industry, which has seen a dramatic drop-off in recent years. As far as the price of oil, none of the economic indicators agree on where the price of oil might go. According to demand indicators, demand is not the problem. The good news is that more firms are in play as leases change hands and production continues. The break even point for exploration companies is also down. It used to be in the mid-$70s and now, the break even point is closer to $40 per barrel.
The news is not so good for area fabricators and oil service companies. With the focus to keep costs down and the break even point low, companies are looking for ways to cut. One way is to eliminate new construction of Gulf oil platforms and instead use an umbilical to an existing platform.
One question asked by an attendee was about the added regulation in the wake of the BP oil spill. Dr. Scott said the transition from the Obama to the Trump administration will soften that specific blow to the oil industry locally. The current administration has signaled it will ease up on many of the environmental regulations that some firms have blamed for their own cutbacks.
Four key Lafayette firms that are not directly impacted by the oil industry and driving employment in Acadiana are Acadian Companies, Stuller Inc, Schumacher Group and LHS. This, says Dr. Scott, is evidence of the area's continued diversification. The technology sector is mixed in Acadiana in Acadiana. Enquero and Proficient are two firms that are not on hiring schedule.
Scott started with comments on the active hurricane season and how the state has so far 'dodged the bullet'. In recent years, a major hurricane has affected the economic outlook for states that saw the damage.
Much of the outlook for Louisiana and the nation has to do with what President Trump does with respect to the North American Free Trade Agreement (NAFTA). Dr. Scott says the problem is not with Mexico or Canada. The problem, in his eyes, is China. According to the outlook, we import four times the amount of goods from China than we as a nation sell to China.
[Find LIVE updates here throughout the event.]