Louisiana Budget Question re $80- per barrel oil prices

the extra cash will disappear into the governmental abyss just as it always does

This.

Whenever oil goes up, the legislature and government lock in high spending based on that income.

Whenever oil goes down, we have the same shite we’ve seen the last few years with higher taxes and/or discretionary cuts which, by the state constitution, can only come from education or health care.

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how much of a positive impact would $80- per barrel oil have on Louisiana's financial position?

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It will be terrible. The Governor will call a special session to reset the budget to be based on $80 per barrel. When it tanks again, we will be fricked.

IIRC both royalties and severance taxes are based on total value of production

that depends on both price and volume

the rule of thumb i've heard them all use is like $30mil per dollar of crude price

but that has been going down steadily over time, as production in the state has been going down steadily over time. and that's expected to continue, as we don't seem to have any big deal fracking play for oil like the Permian

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the rule of thumb i've heard them all use is like $30mil per dollar of crude price

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I heard $12m but like you say, it's got a volume component. And I am going from memory so I could be wrong.

The other issue is the industry. If price goes up then there is more investment and expansion of the related industries. So more income and sales tax revenue. If oil got to $80 you will see some of that, but not as much as there was before.


Some of that is because the industry is just more efficient. Some of that is because they will be gun shy to over-invest when the market may not be sustainable at those prices (mostly because of shale). And lastly, if you have anti-business policies in place from JBE their will just be less financial incentive to do so.

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The other issue is the industry. If price goes up then there is more investment and expansion of the related industries.

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There's also a geographic/geologic issue. Texas has bounced back better than us and didn't dip as far, because you can produce a lot more (oil) cheaply there than here. because we have no Permian and our Tuscaloosa Shale is nowhere near as easy to frack



Texas (red) didn't go as negative (and their split from us was even bigger pre-JBE), and they've returned to ~5% employment growth year over year while we're just now leveling out