The Hits Keep Coming

State Economist Loren Scott Shares Outlook for 2021

The first reported case of the novel coronavirus in Louisiana was March 9, 2020, and soon after, the dominos began to fall: school closures, limited crowd sizes, curfews and stay-at-home orders, among other government measures to stop the spread of the virus. 

With businesses deemed non-essential temporary forced to shut their doors and others seeing their customers dwindle, it’s no surprise that the Louisiana economy took a big blow in 2020 following the outbreak of COVID-19. 

In April – the worst month for the Louisiana economy last year – the state lost 271,900 jobs and the unemployment rate jumped to 14.5 percent, said economist, Dr. Loren Scott, during a February Leadership Power Webcast hosted by Business Report. According to Scott’s data, Houma lost 8,800 jobs that month.

That month, the hardest-hit industries were leisure and hospitality (106,500 lost jobs), health care and social services (30,800) and retail (28,800 jobs), according to Scott’s presentation.  

The April 2020 numbers are bleak, but the economist pointed out that the state is heading in the right direction. 

Louisiana recovered 188,700 jobs by December of 2020, a 69 percent improvement, and the unemployment rate dropped to 7.2 percent.

“When we did our forecast back in September of last year…we thought that looking at what was happening nationally, we would improve by 52 percent by December,” Scott said. “So the good news is that we’re well ahead on that.  

However, the mining sector, which includes oil and gas, was worse in December than it was in April, down 42 percent, Scott said. “This is a very troublesome time for us here. I am more than a little bit concerned,” he continued. 

Scott highlighted several moves by President Joe Biden that he argued are not helping the oil and gas industry. According to Scott, Biden’s nomination to lead the Department of the Interior U.S. Representative, Deb Haaland, repeatedly called for an all-out fracking ban, supports the Green New Deal and wants to ban drilling on public lands and waters.

On his first day in office, Biden issued a 60-day ban on oil and gas leasing and permitting on federal lands and waters to evaluate legal and policy implications of the program and revoked the permit for the Keystone XL oil pipeline. Although the Keystone XL doesn’t run through the state, Scott added that a number of Louisiana companies have coated pipelines for the project. 

Yet, with all his concerns over the Biden’s orders, Scott said there is some “good news” for the Gulf of Mexico. 

“This is one of the most environmentally advantageous places to harvest hydrocarbons. If you’re going to do it,” he said. 

Scott also noted that lease holders have “lease enjoyment rights”: a purchased lease is a legal contract between an oil company and the federal government and the government cannot make regulatory changes that make the lease useless. 

The economist added that the length of drilling permits have been raised from one year to three years and there are now opportunities for companies to reduce royalty payments to the federal government through different avenues. 

Projects in the works for Louisiana are more good news for the economy, Scott said, such as the Shintech $1.3 billion expansion in (Iberville and West Baton Rouge parishes), Mitsubishi Chemicals $1 billion manufacturing complex in Geismar, Gron Fuels $1.2 billon renewable fuel complex at the Port of Greater Baton Rouge (340-plus jobs) and the new Amazon distribution at the vacant Cortana Mall in Baton Rouge (1,000-plus jobs), among others. 

Governor John Bel Edwards also gave remarks during the webcast. He asserted that the best way to bring the economy back is to end the pandemic.  

“We believe the best medicine for our economy will be overcoming COVID-19 and the constraints it’s placed on consumer confidence and on business activities because of the need to be safe and so forth,” he said before noting the impact the virus has had on a big sector in Louisiana: tourism. 

The governor also commented on moratorium on oil and gas leasing by Biden, saying that with will “adversely affect” the state economy. 

“I’m going to work as hard as I can to make sure that we can influence the policies that come next to make sure that leasing and permitting get back on track,” Edwards said. “…The Gulf is hugely important for us, and I believe, hugely important for the country as well. And I think there’s a strong case to be made that there are advantages for the environment in producing oil in the Gulf as opposed to elsewhere. So we’ve got to make that case as best we can.” •