Although oil prices have plunged aplenty over the past six months, from more than $100 a barrel to less than $50, today’s oil business problems are light years away from what they were across south Louisiana in the 1980s.
“We lost 146,000 jobs in the 1980s,” former LSU economist Loren Scott tells Lafayette newspaper The Advertiser of Louisiana’s oil downturn during a five-year stretch in that decade. “It was a bloodbath.”
At the most dire times, Scott recalls, a commonly told joke was that Louisianans were slipping into Mexico to find work. Times are plenty tough now. Oil service giants Schlumberger, Halliburton and Baker Hughes—all of which have a significant presence in Louisiana—recently announced layoffs.
But Scott says what oil companies face today doesn’t approach the tough times of the ’80s.
“Prior to the early ’80s, the price had gone from $3 a barrel to $35. Everybody and their mother was getting into the oil business. Lending companies were lending a ton. It was like gold-mining times during a gold rush,” Scott says.
But that rush collapsed into a painful heap when the price of oil dropped. Louisiana sank into a downturn that Scott describes as its worst ever. Jobs evaporated. Banks closed.
But Scott says oil companies and lenders both learned from the collapse of the 1980s, and have positioned themselves to better withstand tough turns in the business.
“Lenders are much more circumspect when it came to lending to oil companies,” Scott says. “Lenders are not as vulnerable.”
Companies, too, have learned, running leaner since the collapse 30 years ago. Read the full story.
