With the global coronavirus pandemic quickly becoming a catastrophe for Louisiana’s energy industry, oil and gas workers throughout the state are finding themselves jobless at a record pace.
Louisiana Energy Industry Employed Over 34,000 Before Coronavirus
Energy companies employed more than 34,000 Louisiana workers as recently as January 2020. But with oil hovering at just over $20 per barrel, more and more are cutting contracts and reducing their payrolls.
“Oil companies have been cutting the heck out of their capital budgets — multibillion-dollar cutbacks,” economist Loren Scott told The Advocate. “If a project hasn’t started, they’ll delay it. They’re going to their suppliers and saying they have to cut them. In the short run, it’s not happy for the state of Louisiana.”
Louisiana’s Oil and Gas Producers Could Shed 70% of Workforce
Energy prices began to drop in January, as the coronavirus outbreak proceeded to wreck the Chinese economy and demand for oil and gas began to wane. The situation only worsened in March, when the outbreak became a global pandemic and two countries – Russia and Saudi Arabia – inexplicably chose to up production, setting off a global price war.
A survey recently conducted by the Louisiana Oil and Gas Association suggested independent drilling and service companies will be laying off between 60% and 70% of their workforce in the coming weeks.
The energy crisis is already a disaster for Louisiana’s finances, as the state was expecting oil prices to hover around $59 per barrel in 2020. For every $1 drop in oil over a year, Louisiana loses about $12 million in revenue.
Federal Action Could Stabilize the Energy Market
According to Scott, action on the federal level is needed to help stabilize the market.
“We’re awash in oil,” he noted. “This can be corrected with a phone call if Trump can persuade the Saudis to not put all this extra oil on the market. If they reduce their production to the same level before, the price will go back to the $40s.”
Some have also suggested the federal government could purchase the 77 million barrels of oil needed to fill up the Strategic Petroleum Reserve.
“For a smaller company, it would be a bigger deal,” Tyler Gray, president of Louisiana Mid-Continent Oil and Gas Association, told The Advocate. “For our folks, it would be on a case-by-case basis.”
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