The Real Impact Of Low Oil Prices In Louisiana
For most of us we relate the price of oil to the price of gas for our cars. It is nice to not have to spend as much money to fill up the truck these days but what is the real cost of the dollars we are saving at the pump?
According to the President of the Louisiana Oil and Gas Association the difference of a dollar in a barrel of oil means millions for our state's economy. Here is what Don Briggs told the Louisiana Radio Network. His calculations show that for every dollar a barrel of oil drops that means a loss of $12.5 million for Louisiana's economy.
I think in August of a year ago it was $98 dollars a barrel. Right now, we're at $55 today, but we've been as low as $45 last week. It's a lot of money.
That number is derived from the economic impact of lost jobs, lost taxes, lost fees, and other revenue streams that dry up when the oil industry is struggling. To say that the industry is struggling is an understatement according to Briggs,
In Louisiana, this time last year, we had 116 rigs. We're down to 71 rigs.
It is estimated that the current downturn in prices has cost over 150-thousand jobs in our country. Here is how that drop in production affects the job market.
For every single rig that we have, you can roughly guess that you have about 180 - 200 people direct and indirect on those rigs.
The obvious question is when will there be a turn around in the industry? A lot of that will depend on politics not only in this country but on the international scene as well. Many observers feel the recently announced agreement with Iran is one of the issues that will have to be resolved before the industry can start to make gains in production and employment. Until then it will be a wait and see situation.