O&G Exposure in LA

I remember as a kid when the shite hit the fan in the middle 80's. It was really bad. Several of the houses in our once stable neighborhood ended up becoming rentals or abandoned. New lots of the dads of my friends that lost their jobs.

I'm sure you can google and find some good articles. I think many people don't realize how much things can spill over to all industries and jobs that can be affected if oil tanks the economy.

One thing that gives me hope about it not being really bad if it doesn't stay this long for years and years is that we have some major projects that are on the books and funded that are just starting. Sasol and some of those natural gas export facilities just to name a few.

I think our economy is more broad now than it was in the 80s. It will hurt (especially in Lafayette) but I don't think it will be devastating. We also probably have more plants and companies that will actually benefit from cheap oil.

No doubt if you work in the production patch, though, I'd be worried. Interestingly enough... you may start seeing layoffs of skilled workers in the oil patch at the same time these new plants are going to need tons of new workers - who we currently don't have. Maybe they can just slide into these new jobs.

The state budget is a whole another matter. We are still heavily dependent on severance taxes, which are a percentage tax. We've had some really bad structural budget issues for a while now... but they would have been critical if not for the high severance tax collections. If that goes away... we are going to be looking at incredible, government-altering deficits.

The sev tax is what has allowed Jindal and the legis to basically kick the can down the road by keeping the budget together with baling wire and BS. Those days will soon end.

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If these prices remain low for several years how will Louisiana be impacted?

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It is very bad for the state's budget, as much of our revenues depend on oil and gas royalties on state leases. This will disproportionately impact healthcare and education.

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Has the state been able to diversify some or are we still highly dependent on the royalty income from production for the state budget and personal income for production company employees?

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See above regarding the state. The state's economy has diversified somewhat for individuals. While there are a large number of people that would be negatively effected by low prices (particularly in Houma, Thibodaux, Lafayette, Broussard, ect), low prices actually benefit many of Louisiana's other major industries.

Agriculture benefits due to lower fuel prices.
Individual consumers benefit by having more disposable income.
Retailers benefit from that disposable income (at least the ones not in the oil patch).
Refiners and petrochemicals benefit from having to pay lower prices for their feed stock to run their plants as well as lower prices for their electricity.

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Is cheap oil bad for LA as a whole (I assume yes)?

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Bad for the government, bad for Acadiana, bad for Haynesville, good for much of the rest of the state.

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I'm involved in the LA chemical industry and work with clients that use natural gas as a feed stock, but my company is also involved in refinery and was looking to expand into the upstream environment. Just curious and thanks to any responses.

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Downstream benefits from low prices due to reduced production costs. Upstream suffers from squeezed profit margins and lower sale prices, midstream benefits from lower transportation costs (assuming no change in supply). As supply goes down, midstream will suffer until the price and/or supply goes back up.