With all the talk about optimism in the American oil and gas industry, it is puzzling to some to read a headline stating that a community heavy in oil and gas is experiencing job loss. Unfortunately, this is becoming an all to common trend in Louisiana.
While United States is experiencing a significant increase in drilling activity, Louisiana is seeing historically low rig counts. The United States saw a drastic increase in employment from 4.5 percent in December to 5.1 in January, but communities like the Houma-Thibodaux area saw 1,800 jobs cut in the same 31-day period. Unemployment in this area has increased from 6.1 percent in December to 6.7 percent in January, according to the article.
This declining trend in employment is of grave concern for many of our state officials. The State Legislative Economist, Greg Albrecht, said at a recent Revenue Estimating Conference meeting, “What we need is employment growth to stop declining. It boils down to that. We have to have job growth. Or at least slower declining… We need to see some sustained improvement in that.”
An increase in unemployment is harmful to our communities and even worse for our state’s bottom line. The Commissioner of Administration, Jay Dardenne, blamed the rate of unemployment for our budget woes. He said, “All that points back to employment. I think our biggest challenge is to turn around the state’s employment numbers….The big challenge for the state right now is to reverse that trend and get more people working so that they’re paying income tax and that they’re buying more things.”
The Houma-Thibodaux area, like the rest of Louisiana, is highly dependent on our oil and gas industry. Of the 6,600 total jobs lost in that community, 3,700 direct oil and gas jobs were lost. It is highly likely that the remaining 2,900 jobs were lost due to the significance the industry has in this area.
What is most disheartening is the action the state has taken against hundreds of oil and gas companies. As we speak, 5 coastal parishes are suing oil and gas companies for alleged damages. To make matters worse, the Governor sent a letter to 15 coastal parishes stating that if they didn’t file suit against these oil companies, the state would do it for them.
Louisiana’s tax environment is not necessarily a welcome mat to future investment either. Over the past two years, there have been over a billion dollars in taxes raised. It’s hard to believe that any business, regardless of the industry, would want to come to Louisiana and stand in line for the state to decide what’s their “fair share.”
It’s time to flip the conversation. We need to have robust discussions about what it would take to get the industry back to work. What can we do to attract more investment should be the focus, not how can we extract more from the companies fighting for survival. The oil and gas industry has the ability to pull Louisiana out of these tough financial times. Instead of adding insult to injury, let’s create a stable tax environment that welcomes growth and investment, and stop the frivolous lawsuits that are driving vital jobs out of Louisiana.