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?
Thursday's Blogs from the Bog!
Pat Bowlen steps down; typhoon caused Taiwan plane crash; Arizona execution botched and more national and international news for Thursday, July 24, 2014.
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.
An arrest was announced this morning in connection with last week’s bomb scare at UL Lafayette.
Attorneys, judges and others interviewed by LaPolitics expect 15 to 20 district judge races this year.
"I feel like I'm under siege," an attorney said recently over drinks at Galatoire's Bistro in Baton Rouge. "We all do. Every time I turn around somebody wants a check. District attorney races. The judges. They're killing us."
As a requirement for running for Congress in the 6th District, former Gov. Edwin Edwards has filed his financial disclosure statement with the U.S. House showing his income in 2013 totaling $242,787.
Unlike those swindled by Bernie Madoff, the victims of Texas businessman Robert Allen Stanford’s Ponzi scheme won’t be getting any relief from the Securities Investor Protection Corp.’s emergency fund after a recent appellate court ruling.
The legal challenge is part of a continuing struggle over Common Core, which has become controversial since the Board of Elementary and Secondary Education adopted the standards in 2010.
The lone Democrat to announce he's running for governor, state Rep. John Bel Edwards, criticized Republican Gov. Bobby Jindal's budgeting tactics as "running the state like a big Ponzi scheme."
State police have arrested a 42-year-old Kaplan man in the July 7 hit and run fatality crash that killed a bicyclist on Louisiana Highway 92 near Milton.
Republican U.S. Rep. Bill Cassidy has picked up support for his U.S. Senate campaign from a former GOP competitor.
Lisa Hargis Smith lived a mysterious life as seen with her death earlier this month and its impact on the community of those who knew her, whether as a star student in Lafayette High’s class of ‘69, or later as a woman struggling with homelessness and mental illness.
Attorney Valerie Gotch Garrett will announce on Tuesday that she plans to run for the Division E seat of the 15th Judicial District Court.
Back in 2012, three Baton Rouge attorneys came to the aid of several disgruntled police officers with a high-profile lawsuit against the Lafayette Police chief and a number of higher-ups in city-parish government, but in a federal courtroom Thursday, their claims of conspiracy coupled with a lack of evidence backfired and the case was dismissed.
Gov. Bobby Jindal's administration intends to rework how it pays the private managed care networks that provide health services to two-thirds of Louisiana's Medicaid patients.
Gov. Bobby Jindal's administration is raising health insurance rates and cutting benefits for state employees and retirees, to keep their insurance program solvent.
Local, state and federal law enforcement officials spent much of Thursday reviewing their reaction to this week’s bomb threat, which led to the closure and evacuation of UL Lafayette and Girard Park, and a massive search Wednesday for two alleged explosive devices.
"We're not in a better place from the policy perspective than we were two weeks ago," says Education Superintendent John White, commenting on Thursday's face-to-face meeting with Gov. Bobby Jindal to discuss their dispute over Common Core.
Gov. Bobby Jindal appears to remain unmoved by offers of a compromise on procuring testing materials tied to the Common Core based on a terse statement his office released following a meeting Thursday with Superintendent John White.