Top Economist Says Industry News is Good – and Not

Cautious Optimism
May 16, 2018
Cautiously Optimistic
May 16, 2018
Cautious Optimism
May 16, 2018
Cautiously Optimistic
May 16, 2018
BY JOHN DESANTIS

There are many ways to measure an economy’s progress.

Here in the Bayou Region rig counts, the number of oilfield service boats that stay docked along with things like unemployment give varying types of information.


A mixed bag of measures can lead to a mixed bag of results.

That’s to some degree what Baton Rouge economist Loren Scott sees when he looks at our economy several different factors leading to several different readings.

“Unemployment bottomed out finally,” he said in a report issued last month. “The new lease sales, west central and eastern Gulf combined were good news and not so good news.”


The bid amounts when the feds put blocks in the Gulf up for auction were not terribly impressive, although better than they were last time.

What Scott noticed in particular is that the leases that were purchased were adjacent to other leases the oil exploration companies already had.

“If they have drilled a site and they hit, instead of asking Gulf Island to build a big platform of a spar right above, they might use subsea steams allowing them to tie back to an existing platform,” explained Scott, a seasoned analyst of the region’s ups and downs in both good times and bad.


Scott has consulted for BP, ExxonMobil, Entergy Corporation, J. P. Morgan Chase, Capital One Financial, Nucor, Sasol, and other energy sector giants.

The price of oil, which also affects local fortunes, has seen enough of a rise for the numbers to be considered good, Scott said.

“The break-even point has dropped a lot from back in 2014 when $100 was the break-even point.” Scott said. “Now it’s gone to $70, $80, and it’s gone down to fifty bucks.”


The region will have to see a sustained $60 per barrel price of oil before extensive drilling returns to the Gulf, Scott theorized.

“But they are still buying leases and the employment levels are up after a horrendous time,” Scott said.

Diversification — something more local companies are doing — is also a good thing, Scott said.


At a recent South Central Industrial Association luncheon where he spoke of his analysis, Scott said he sat next to officials from companies who are now building research vessels, or spreading their wings geographically.

“There is a need for what we do in west Texas,” said Scott, who maintains the region, despite the slump, has a future and a lot of good things going for it. “Compare us to a state that doesn’t have oil and gas. We have teachers but we also have an energy sector, so our teachers are making $7000 a year more than a teacher in Mississippi.” •