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Hank Price woke up to a surprise Thursday.

When the Alexandria native took his pickup in for his weekly fill-up, the bill was much higher than he anticipated.

“I filled up last week, and it was about 15 cents cheaper (per gallon),” he said. “It was a surprise.”

Gas prices have shot up quickly over the past several days in Central Louisiana — by 14 cents per gallon or more for regular unleaded at many stations in Alexandria and Pineville.

While the increase was sharper than both the state and national average, prices have been going up nationwide as the price of crude oil has risen.

A month ago, oil was selling for just over $74 a barrel, and it was approximately $76 in late September. On Thursday, it climbed over $84 before settling in at less than $82 in the late afternoon.

“Oil prices have climbed back up, started to rebound,” said Don Briggs, president of the Louisiana Oil and Gas Association. “When you see higher oil prices, you’re going to see higher gas prices.”

“It takes money out of the system,” said Elton Pody, president of the Central Louisiana Chamber of Commerce. “Money that might be spent elsewhere.”

Oil prices have gone up even though crude stockpiles remain high and there has not been a significant increase in demand. The Energy Information Administration said Wednesday that the nation’s crude inventories are 7 percent above the levels from a year ago, when gas prices in the state were about 35 cents cheaper on average.

Energy analyst The Schork Report say that more crude is being produced and less is being refined, “the textbook definition of oversupply.”

“It doesn’t make a lot of sense, really,” Briggs said.

Several analysts point to the dollar weakening against the euro as a driver of increased oil prices, since dollar-based commodities become cheaper for investors with other currencies when the dollar drops. The weak dollar and gains in the stock market likely spurred the increased investment in crude.

Nationally, gas prices jumped from $2.69 a gallon on average for regular unleaded a week ago to $2.77 Thursday. In Louisiana over the past week, the average has gone from $2.58 per gallon to $2.65, which is what many Alexandria-area stations were charging Thursday.

As for why this area’s prices climbed at a sharper rate, there could be several explanations. Prices had been significantly lower than the state average in the Alexandria-Pineville area. Stations’ prices may have been based on shipments bought when oil was selling more cheaply. And, Briggs said, many stations are transitioning to different types of fuels this time of year, which has associated costs.

As an example of the recent volatility of gas prices, the Super 1 Foods gas station in the Pines shopping center in Pineville was selling gas for $2.51 a gallon for regular unleaded last weekend. The price rose to $2.58 by Tuesday morning and shot up to $2.70 by Wednesday morning. It dropped back to $2.65 by Wednesday night.

Original Article

Don Briggs – Louisiana Oil & Gas Association

On September 29, 2010, the Louisiana Tax Commission, appointed by the Governor, approved a new rule that would increase oil & gas property tax assessments within the state by more than double the established rates in 2010. Specifically, this new measure targets the lateral sections of unconventional oil & gas wells. Without question, this tax increase will stifle the over $10 billion investment in the Haynesville Shale.

In order to adequately and economically develop unconventional resource plays such as the Haynesville Shale, oil & gas companies needed to explore new and innovative technological advancements to capture these vital energy resources. The process of horizontal drilling became the most effective method to ensure the production of these unconventional oil & gas reserves.

During the process of drilling a horizontal well, a lateral section is drilled and established. This lateral section is cemented, perforated, and essentially becomes the key component to severing oil & gas from a targeted geological formation. The 2011 rule changes the depth to total “measured depth” which will assess the horizontal section the same as vertical wells with casing, pipe, and equipment.

Prior to the new imposed rule, property tax rules addressed valued equipment assets found in the vertical section of an oil & gas well. According to the LA Tax Commission’s new rules, the lateral section of an oil & gas well has an intrinsic value. This finding could not be further from the truth. As the lateral section is permanently cemented deep below the earth’s surface, the equipment within this section becomes an asset that can no longer be recovered by an oil & gas operator. Additionally, some horizontal wells have no casing in the horizontal section, called an “open hole.” To tax equipment that has no potential for resale and is non-recoverable is unfair and unreasonable.

Today, the Haynesville Shale serves as one of the few positive economic drivers in our state. At a time when oil & gas development is at a stand still in the Gulf of Mexico and we are experiencing significantly low natural gas prices, a tax increase of this magnitude will lead to a statewide exodus of many companies and certainly discourage future companies from doing business within our state.

While the Governor, Louisiana Economic Development, and local officials work to recruit investment and jobs throughout our state, the Louisiana Tax Commission has just put a significant dent in those efforts. The old adage that Louisiana is “Open for Business” may not be the case for long.