Oil prices worry people in Louisiana's oil patch and beyond - FOX 8 WVUE New Orleans News, Weather, Sports, Social

Oil prices worry people in Louisiana's oil patch and beyond

The falling gasoline prices have drivers celebrating, but in Louisiana many are concerned about the impact on oil industry jobs as well as state government.

"I love them and I hope it continues to go down,” said Rene' Anderson at a local gas station.

The break drivers are getting on prices at the gas pump have many drivers giddy.

"Certainly consumers are thrilled with gas prices when they're paying $2.49 at the pump,” said UNO Economist Walter Lane, Ph.D.

In recent months, global oil prices have tumbled more than 30 percent, and things are happening on the home front, too.

"The United States is coming very close to producing as much oil as Saudi Arabia - we're just a little bit behind, a few percentage points behind them,” said Lane.

He said hydraulic fracturing, called fracking, is now a major factor in terms of domestic production.

"We're doing well out in the Gulf [of Mexico], but fracking is the vast majority of the new production in the United States,” Lane said.

But fracking is not insulated from the effects of the oil prices.

"It'll slow down fracking because the price won't be there and it won't be feasible for them to go do that drilling, either,” said Louisiana Senate President John Alario.

Some businesses whose success is tied to offshore activities acknowledged that they fear a slowdown.

"If oil prices do what some predictions are and go down to $50 a barrel, that's really big effects on the state of Louisiana. Although we may like it as consumers at the pump, low oil prices are not good for Louisiana,” said Lane.

"If oil gets below $80 a barrel, you see oil companies begin to stop drilling or slow down the drilling, beginning to lay-off employees in our state which has a tremendous impact on what happens throughout government,” said Alario

Alario is considered an expert on state government budget.

"When oil prices drop a dollar a barrel, that means about a $12 million loss to the state general fund,” he said.

The oil prices have already begun to affect the budget.

“We're expecting to find a shortfall of about $170 million beginning now at mid-year, so there will have to be some adjustments made in our budget,” said Alario.

In terms of adjusting the budget, the Legislature has limited options.

"It concerns me not only in higher ed, but it concerns me in healthcare also which then begins to hurt the poor and those who least can afford to be devastated at this point in time,” said Alario.

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