More job loss likely from Shell Oil's staggering drop in earning - FOX 8 WVUE New Orleans News, Weather, Sports, Social

More job loss likely from Shell Oil's staggering drop in earnings

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NEW ORLEANS, LA (WVUE) -

For states like Louisiana, having oil prices rise to just over $30 a barrel beats the recent low of the 20s.

"The oil prices that we need, in terms of cost, are even higher than $30, so it's better that it's not still going down,” said Eric Smith of Tulane Energy Center.

While oil prices have gone up slightly, Smith believes at least $50 a barrel is needed for a number of reasons.

"I don't really think you're going to see a big surge in drilling just because it stopped going down,” said Smith.

The oil industry continues to reel from the low prices. Oil giant Shell is making headlines as its fourth-quarter earnings for 2015 dropped 44 percent.

Additionally, Shell has sealed a merger deal with BG Group PLC, which will help the company in some ways, but a significant number of jobs will be eliminated. As as a result of the deal - and streamlining and integration - 10,000 jobs will be lost across both companies for 2015-2016.

“The jobs reduction figure that was included as part of today's results announcement is a global workforce figure, which was previously shared. We are not providing breakdowns by location or business,” said Shell Spokeswoman Kimberly Windon in an email.

Still, Michael Hecht of GNO Inc., which works to improve economic development, said for the period of November 2014 to November 2015, the New Orleans area felt a serious sting from the low oil prices.

"Our region has lost, in fact, about 1,100 energy jobs, so we've lost a significant number,” he said.

Statewide job losses in the industry are put at over 10,000.

"The good news is none of this will affect the downstream operations, refineries, and petro-chemical plants and all of that. They're doing just fine,” Smith said.

"And we have gained overall 6,500, we're net 6,500, so seems to indicate that a lot of these individuals are finding new work in the petro-chemical corridor, which is booming along the river between New Orleans and Baton Rouge,” said Hecht.

Local consumers are saving a lot of money on gasoline, money they can use for other things like shopping and in other ways that benefit the economy.

“For consumers, it's stimulus, it's a net savings because we still have under $2 dollars gasoline,” said Hecht.

But state government’s bank account continues to take a hit given the oil prices.

"Every dollar drop on a barrel of oil takes about $12 or $13 million out of our state economy because of severance taxes that we don't get,” said Hecht.

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