2016 Brings Continued Challenges
2015 has come and gone with much fan fair. Crude oil prices dropped to historic lows, natural gas prices took a predictable dive and 250,000 plus jobs were lost around the globe in oil and gas. Due to the downturn, many family driven companies have closed their doors. Homes have been foreclosed and equipment taken into repossession by the banks. Unfortunately, this is not the first time the oil and gas industry has been in this position.
While 2016 is a new day, this does not always mean a brighter future. Therefore, the oil and gas industry must focus on perspective. While we have a record low rig count, historic low permitting, and have lost around 9,000 jobs in Louisiana, we are just one of many states that have felt the impact of this decline. We are not in this fight alone.
When crude oil prices drop, the grand question is always how long could this downturn last? This time, however, we are asking if this is the “new normal” for oil and gas. Is the global oil cartel, OPEC, having such a great and terrible impact on our natural resource prices that we could be in this position for quite some time? The answer is simply not that easy to come about at this time.
The state is already feeling a ripple effect of low resource prices. Car dealers, hotels, restaurants, and shopping centers are feeling the effect of numerous men and women coming home from the “patch” with no paycheck. So can the recent decision from Washington D.C. to lift the crude oil export ban help our industry? Absolutely. This is not only good news for Louisiana but for the entire nation. Will the lifted ban offer help for 2016? Considering that the ban has been in place for nearly 40 years, the details of how quickly we can begin exporting are still being sorted out.
But, here is the good news for the state of Louisiana. While the oil and gas industry has taken a hit on the nose, our people are some of the most resilient people in the workforce. These men and women are used to rain, sleet, snow and lightening. The job must go on for them. So when rain, sleet, snow and lightening hits their personal lives, they are mentally prepared. No matter the future of our natural resource prices or the direction our newly elected officials take our state, the oil and gas industry will remain strong. We have been drilling wells in this state since the early 1900’s. We will not be stopping anytime soon. While we cannot predict the future, we do have some factors that we must deal with for today. We have $37 crude oil and $2 natural gas. To state things in a colloquial manner, we can only go up from here!
The 2015 political election season ushered in a much different looking political landscape for 2016. A new governor has been inaugurated along with a new attorney general and many new legislators in both chambers.
While many predicted that 2016 would be a unique time for our state, not many folks predicted the historic event that took place on January 11th. For the first time in the state’s history, both chambers of the legislative branch of government selected new leaders without the direct influence of the executive branch. An independence from the Governor’s Office will add a new burden on the legislative branch.
For the last several decades, when the House or the Senate made choices that upset the people, the scapegoat was always to blame the sitting governor who had hand-picked the Senate President and the Speaker of the House. This easy out of blaming the governor is now over. This new legislature for 2016 will be held accountable for all of their actions moving forward. If good or bad policy is voted into law, they will only be able to point fingers at each other for the outcome.
Don Briggs is President of the Louisiana
Oil and Gas Association.