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?
The Lafayette superintendent insists the budget is illegal and vows to fight on.
"I am not a scientist," Senate Republican Leader Mitch McConnell has said numerous times, a response that other members of his party have parroted.
Republicans are running strong races against endangered Democratic incumbents in states such as North Carolina, Colorado, Arkansas, Louisiana and Alaska. Republicans are also looking to replace retiring Democrats in Iowa and West Virginia with a GOP lawmaker.
Republican congressman Vance McAllister is trying to make up to Louisiana voters for getting too close to a married former employee.
You may not like all of “it,” but U.S. Sen. Mary Landrieu, unlike many of her colleagues, isn't sitting around twiddling her thumbs in Congress.
Saints safety Kenny Vaccaro says he "can't wait" to play against Green Bay quarterback Aaron Rodgers.
The heat keeps rising for Iberia Parish Sheriff Louis Ackal as a new slate of corruption allegations surfaced this week.
If opposing defenses sell out to stop the Packers' passing game, they risk being gashed by powerful running back Eddie Lacy, a New Orleans-area native.
At the horn the officiating crew trotted to the tunnel and left security personnel to clean up after them.
Friday's Blogs from the Bog!
Sign "ninjas" cleaning up clutter; NYC doctor positive for Ebola; Ferguson grand jury decision nears; and more national and international news for Friday, October 24, 2014.
We can safely assume incumbent Chief K.P. Gibson isn’t too worried about this challenger.
Nationally, Republicans must gain six seats to win Senate control. The most competitive races, many in states where Obama lost in 2012, remain too close to call.
The Baton Rouge Republican has repeatedly battled a perception within his own party that he perhaps wasn't the best choice to carry the GOP banner.
Even if Jimmy Graham's production dips while the star tight end recovers from a shoulder injury, it looks like Drew Brees won't have much trouble finding other targets.
A former campaign manager for Senate candidate Rob Maness is striking at the Republican contender's tea party support, saying Maness only sought to appeal to conservative organizations because he needed money for his campaign.
Ninety-two percent of public school teachers were rated either effective or highly effective in a report the state issued marking the second year of a new statewide evaluation process.
School board members Mark Babineaux, Hunter Beasley and Tehmi Chassion can vote to fire Cooper — because we all know that’s exactly what they’ll do.
District 2 school board candidate Simon Mahan is hoping to unseat first-term incumbent and former Carencro Mayor Tommy Angelle in the Nov. 4 election.
District Attorney Mike Harson is showing his desperation by falsely attributing quotes to his opponent and blocking journalists from his social media.
The governor is traveling the country laying the groundwork for a possible 2016 presidential campaign, but his approval ratings at home hover well below 50 percent.
State District Judge Bob Downing extended the order and delayed a planned Wednesday hearing about a permanent injunction while negotiations continue between Attorney General Buddy Caldwell and the waste disposal site operator.
New Louisiana higher education commissioner Joseph Rallo will be paid more than his predecessor.
Elijah McGuire and Alonzo Harris each had four rushing touchdowns, and Louisiana-Lafayette rolled to 419 yards on the ground in a 55-40 victory over Arkansas State on Tuesday night.
Bill and Hillary Clinton are the validators-in-chief for Democrats struggling through a bleak campaign season in states where President Barack Obama is deeply unpopular.