That's a threat to Louisiana's newfound wealth, which is bolstered largely by oil prices that topped $70 last year. Albrecht says the state is following the situation closely. "It's all speculation, but we all do it, and that's how oil prices work. It's cyclical," he says. "We have accounted for prices being below $50 for the second half of the fiscal year [Jan. 1. through June 31]. When we made that forecast back in December, everyone thought we were being too conservative. Some people thought I was being goofy."
The state currently has $1.3 billion in the bank, a staggering figure. "We've never seen that much in there," says Deputy Treasurer Jason Redmond. But it's only because the Legislature opted out of cashing in during a December special session, when there weren't enough votes to lift a constitutional spending cap. When lawmakers return for a regular session in April, the money will be back up for grabs, especially with elections looming ' as long as crude oil prices don't rain on the parade.
If prices drop below the $50 mark, Albrecht says the state's financial forecast will have to be re-drafted by the Revenue Estimating Conference in May. And for every $1 of annualized barrel price the state has to deduct from its forecast, it will lose upward to $13 million, he says. That means lawmakers may have to be more conservative than usual in how they spend the state's money this spring. In Louisiana, where oil is king, anything in the $30 or $40 range would be significant. "At this point, I don't feel it's unreasonable. I wouldn't say it's completely crazy with the way oil prices work," says Albrecht, adding his five-year forecast has oil prices sticking in the $40 area through most of 2010.
Crude oil prices fell below $50 a barrel during the second week of January, its lowest level since May 2005. The drop followed news of a significant rise in crude stockpiles.
The dip was limited, however, by cold weather in the northern United States, a continuing factor that could play out several different ways. International politics intercede as well ' if China and India enter a recession or anything close to it, demand would be reduced along with crude oil prices.
The weather, in concert with the aftereffects of the 2005 hurricane season, has placed power in the hands of buyers. In response, sellers are lobbying the Organization of Petroleum Exporting Countries to cut production in an effort to pick up prices, but the group's major producers aren't budging.
Don Briggs, president of the Louisiana Oil and Gas Association, believes some economists may be crying wolf. Consumers are enjoying lower prices at the pump, at least for now, and few expected oil prices would exceed the $77-per-barrel peak enjoyed in July. Natural gas prices are still holding strong, he adds, and it's too early to fear an impact on exploration or tax revenues. "It's just not a real concern, yet," Briggs says. "If we get down to $40, that would be horrible, but we'll handle it. We're an industry that responds to oil prices. And I don't think OPEC would let it get any lower than that."
Dan S. BornÃ©, president of the Louisiana Chemical Association, says his membership only uses an insignificant amount of oil in their operations and devotes more attention to natural gas prices. Additionally, refineries are expected to lift their operations to the highest level in two years during 2007. "From the chemical point of view, lower energy prices always equate to lower raw material costs," he says. "So as a general observation, this could be favorable for us as long as it doesn't impact natural gas prices."
Despite the positive spin, Albrecht and others warn that $30 or $40 crude oil prices could very well be on the way. But for now, it's all a waiting game as the prices unfold in real time over the Internet and airwaves. "We'll be tracking this monthly from the state's point of view," Albrecht says, "but I'm watching it daily from my office. It drives me crazy sometimes."
Even if Albrecht catches a potential falling wave of prices and revises his official state forecast, one question remains: Will lawmakers heed warnings for a more conservative approach?
Joshua Dore of Breaux Bridge was sentenced Tuesday to 1.5 years in prison for counterfeiting, according to a press release issued by U.S. Attorney Stephanie Finley’s office on Wednesday.
School super Pat Cooper alleges Lafayette Parish School Board member Mark Allen Babineaux, an attorney, publicly disclosed the details of a closed-door executive session.
Sun Belt commissioner presents title and practice gets under way in preparation for Saturday
Kerry Bertrand’s charge was upgraded Tuesday by an Acadia Parish grand jury from manslaughter to second-degree murder for his alleged role in the drowning death of his stepdaughter, Skylar Credeur.
Sean Payton announced Wednesday that veteran Shayne Graham was New Orleans' new kicker, and that rookie Terron Armstead would get his first start at left tackle.
Here's your daily look at late-breaking national and international news, upcoming events and the stories that will be talked about Wednesday, December 18, 2013
Should new parents be required by law to attend special classes before being permitted to raise their child? It’s an idea state Rep. Regina Barrow, D-Baton Rouge, is seriously considering.
The agenda for Wednesday’s meeting of the Lafayette Parish School Board tells it all: The board has lost sight of its elected purpose.
A public Mass will be held Thursday in New Orleans for artist George Rodrigue, who died Saturday of cancer at age 69.
Eight former employees of The Times-Picayune have sued the newspaper and parent Advance Publications Inc., alleging their layoffs violated a longstanding "job security pledge" and age discrimination laws.
Gov. Bobby Jindal's administration hasn't done an independent performance review of its $363 million privatization contract for mental health and addictive disorder treatment services.
"Whether it's the tackle position, whether it's a player on defense ... we're going to look closely at what our options are and what gives us the best chance."
Get to Cajun Field today and show your bowl-bound pride
In the end, edge to Tulane, but the 12th man could be the deciding factor.
Says ATC Commissioner Troy Hebert, “Obviously, they are not responsible enough to have the privilege of selling alcohol. This blatant disregard of the law will not be tolerated.”
Louisiana's Department of Education isn't properly monitoring the state's voucher program to make sure students are placed in private schools that demonstrate student achievement and success, according to an audit released Monday.
Five members of the Lafayette Parish School Board are facing potential fines of as much as $1,400 for excessive absences from board meetings in 2013.
Acadiana (14-1) broke the state championship record for points and rushing yards, rolling up 670 yards. Photo by Buddy Delahoussaye
The artist who chronicled Cajun life and later found fame with his enigmatic “Blue Dog” images died Saturday in Houston after a long battle with cancer.
Screaming Eagles break record for most points scored. Photo by Buddy Delahoussaye
The agency previously had said the program raked in more than the $200 million used to balance the budget, but hadn't given a final tally of what was collected and what still was available for spending.
The board is scheduled to vote Friday on proposals from Alleva to make 150 different changes to prices for tickets and parking across university sports events.
It took a unanimous vote of the Youngsville Council to compel the mayor to pay some $7,500 in bills to a few vendors used by the city’s PD.
America is lost, says state Sen. Elbert Guillory, and that’s the reason he’ll be running for Lieutenant Gov. come 2015.
The Louisiana Supreme Court has punted on its first chance to decide whether a new state constitutional provision declaring gun possession a fundamental right could void a long list of criminal statutes that regulate firearms.