In his annual State of the Industry address, Louisiana Oil and Gas Association President Don Briggs on Wednesday offered up a sobering assessment in light of low oil and natural gas prices, historically high production and brimming stockpiles.
“If you’re here for the happy holiday, you need to go into the other room. I’m a realist,” Briggs told a crowd of industry professionals gathered at Shreveport’s Petroleum Club, The Shreveport Times reports.
Lower gasoline prices at the pump are leaving more dollars in Americans’ wallets and cheap natural gas is fueling a petrochemical industry boom in south Louisiana, Briggs said. But the big-time employers in the oil and gas industry—whom Briggs gave a large portion of the credit for sparing Louisiana the worst of the national recession—are suffering, he said.
The current glut in the oil market goes beyond supply and demand, Briggs said. American producers, he said, are becoming too successful for Saudi Arabia, which is used to cornering the market and is flooding the world with cheap oil in response.
And that explanation doesn’t even get into the trickier-to-define realities of international geopolitical games or the fact China, now a major importer of Saudi oil, cut its imports by 8% last year, Briggs said.
“This is the Saudis flexing their muscles,” he said.
Back at home, Briggs said the industry is also being threatened by a lawsuit culture he described as “absolutely deplorable.” He blamed “greedy trial lawyers” for attacking individual company’s profit performance and for deterring businesses from relocating to Louisiana.
Another threat is on the horizon, he said, in the form of the possible slashing of oil and gas tax incentives. Those incentives might be on the chopping block as Gov. Bobby Jindal’s administration and the state Legislature attempt to close massive deficits. With one-time monies gone, Briggs called Jindal’s strategy a “funny money game” that is coming to an end at the expense of the petroleum.
Read the full story by The Shreveport Times.
