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?
With the qualifying deadline for Lafayette Parish School Board elections quickly approaching, a series of candidate forums have been announced by the Lafayette Parish Public Education Stakeholders Council.
The investigation and potential prosecution of the man charged in the recent hit-and-run death of a Youngsville cyclist won’t happen overnight, according to local law enforcement officials.
Louisiana's state school board is holding a special meeting to consider whether to sue Gov. Bobby Jindal in an ongoing dispute over the Common Core education standards.
A bipartisan congressional deal to help improve veterans' health care access includes approval for new veterans clinics in Lafayette and Lake Charles.
Tuesday's Blogs from the Bog!
Critic says Sharknado 2 even better; North Korea offers summer camp; Russia accused of nuclear violations and more national and international news for Tuesday, July 29, 2014.
It wouldn’t be a first, however, as the Chamber has thrown money behind Landrieu before.
The Democratic incumbent, seeking her fourth term in office, is a strong supporter of the Export-Import Bank, which helps finance exports of U.S. companies.
The world is a politically tense place these days with hot spots ranging from the Middle East to Ukraine. In Louisiana and Mississippi, where the political chessboard tends to be a lot less threatening and at times entertaining, this election season is living up to expectations.
Louisiana has joined nine other states in support of Indiana’s appeal of a federal judge’s ruling that the Hoosier State’s ban on sam-sex marriage violates the Constitution.
The Saints are being cautious in an effort to minimize risk of re-injury.
LSU Health Sciences Center says people with a common, hard-to-treat kind of lung cancer can join a new national trial to test drugs faster.
As New Orleans Saints coach Sean Payton and general manager Mickey Loomis spoke about the opening of training camp, steep, tree-covered mountains were in full view behind them.
The family of fallen cyclist Lon Lomas is speaking out after the release this week of the man charged with his death.
"The solutions are obvious: undo consolidation, or amend the charter to make this hybrid attempt at a new form of government work better."
The Board of Elementary and Secondary Education is considering whether to get involved in a lawsuit against Gov. Bobby Jindal for his attempts to undermine use of the Common Core education standards in Louisiana's public schools.
The latest meeting of a south Louisiana flood board that stirred political turmoil with a lawsuit against the oil and gas industry is taking place amid uncertainty over the future of the lawsuit — and the board's own membership.
The photos taken nearly a mile under the Gulf of Mexico are so clear that small holes are visible in a lifeboat that may have gone down or been scuttled when a passenger ship was sunk by a Nazi submarine in 1942.
Advocate columnist and Jindal shill Quin Hillyer has been against the New Orleans levee board lawsuit from day one, but a recent piece targeting author/activist John Barry prompted the perfect rebuttal from the board’s former vice-president, who takes Hillyer to task on just about every distorted claim he’s made on the issue.
Thousands of people who bought health insurance through the marketplace created by the federal health care overhaul face price hikes next year that could top 10 percent.
Louisiana fell one spot in an annual national ranking of child well-being that looks at poverty, education and health access.
A federal judge has decided he doesn't need to hear more arguments in the case of a gay couple who want a Louisiana marriage license.
Saints again bring playoff aspirations into 2014 campaign.
New details in the case against the man arrested for last week’s bomb threat and bank robbery has surfaced, including a MidSouth Bank surveillance video showing the alleged suspect attempt an early-morning bank robbery.
Parents and teachers who support the Common Core education standards sued Gov. Bobby Jindal Tuesday over his actions against the multi-state standards, accusing him of illegally meddling in education policy.