Low Energy Prices to sap Louisiana Economic Growth

“Low energy prices to sap Louisiana economic growth” was the headline from an October 14th article in The Baton Rouge Advocate. Economist Dr. Lauren Scott, coauthor of “Louisiana Economic Outlook: 2016 and 2017,” added that massive industrial projects will keep job growth positive over the next two years. The report projects Louisiana to add 15,400 jobs in 2016 and 19,600 in 2017 and the state into three segments: the rapidly expanding Baton Rouge and Lake Charles regions; “the languid” northern tier; and an oil patch where the suffering isn’t over.

 

Baton Rouge will add 15,100 jobs and Lake Charles will add 9,400 jobs over the next two years in response to the $8.1 billion in announced industrial expansion in the area. Almost all of them are already under construction. The major reason the U.S. chemical industry grew in recent years, and so many petrochemical plants have expanded or grown, is the low cost of natural gas, a feedstock and fuel for the facilities, Scott said. The U.S. price has been a fraction of that in Europe or Asia, where prices are pegged to oil. However, with oil at half of what it was a year ago, the gap has narrowed enough to make some firms take their foot off the accelerator on some of the proposed plants or expansions, Scott said.

 

The major component to the job forecast is the price of oil in one year. Dr. Scott acknowledged this is a very difficult forecast, but concluded $60 a barrel, an increase from the current levels. The following includes a discussion for each area.

 

NEW ORLEANS: The region is expected to see “meager growth” in 2016, adding 2,900 jobs, an increase of 0.5 percent. In 2017, the New Orleans area will add 5,100 jobs, an increase of 0.9 percent. Layoffs in the energy sector and a drop in U.S. Army Corps of Engineers spending will largely offset employment gains in other areas.

 

LAFAYETTE: The state’s third-largest metro area will lose 2,600 jobs in 2016. But if oil prices bounce back to $60 a barrel, Lafayette will add 2,000 jobs in 2017. The area will be helped by the new Bell Helicopters plant opening and the addition of four high-tech firms: Canadian IT company CGI; Enquero, a software technology center; St. Louis-based software developer Perficient; and CSE Icon, a tech consulting firm.

 

HOUMA: The energy sector’s pounding will continue. The area will drop 2,000 jobs in 2016 but recover 1,000 jobs in 2017 if oil prices rebound.

 

LAKE CHARLES: The hottest area in the state, with $39.6 billion in industrial projects underway and $45 billion in the engineering and permitting stages, will add 7,400 jobs in 2016 and 2,000 in 2017.

 

SHREVEPORT-BOSSIER CITY: It will see an eighth consecutive year of falling employment. The area will lose 800 jobs in 2016 but get those back in 2017.

 

MONROE: It will continue a 13-year streak of languishing. The area won’t add any jobs in 2016 and 200 in 2017.

 

ALEXANDRIA: It will continue its modest growth, adding 500 jobs a year. All that will change if American Specialty Alloys follows through with a proposed $2.4 billion, 1,400-person plant.

 

HAMMOND: This is Tangipahoa Parish’s first MSA report and Dr. Scott presented a presentation to the Hammond Chamber of Commerce on October 20th. He noted Hammond’s economy, driven by Southeastern Louisiana University and “an energetic health care sector,” will add 700 jobs in both 2016 and 2017.

Ashton