Tracy Lawrence knows who his fans are
February 3, 2015
Houma native’s quest to Re-write History
February 4, 2015
The first sign appeared as good news, a steady decline in gasoline prices over the past six months.
The benefits of low prices are a no-brainer, for households and businesses alike. Some local gas stations now boast prices below the $2 per gallon mark.
But the lower pump prices come with a cost. A slow wave of layoffs has begun among oilfield service and supply companies in Houma, Morgan City and communities in Lafourche Parish.
There was an optimistic tease on Monday, with the NASDAQ crude price rising to $49.98 per barrel. Some financial experts were quoted in trade media saying they expect a continued upward creep for now, but the predictions are not solid.
In Louisiana, oil and gas industry experts and business leaders say they don’t see an oilfield apocalypse in their crystal balls. But they don’t yet see indications of a bounce-back, either.
Chris John, president of the Baton Rouge-based Mid-Continent Oil and Gas Association, sees the current situation as an “adjustment” to global market conditions.
He recognizes that the oil and gas service business – major economic drivers in Terrebonne and Lafourche – are among the first to register impact from the change.
“The ripple effect starts with the service companies first,” John said.
The causes of change in oil prices, John and other industry voices agree, are multi-fold.
“Oil is bought and sold on the global market,” John said. “So if someone says they know why the price of oil is down and when it is coming back up they are not being truthful. There are too many factors.”
Those factors, John said, include increased U.S. production, and effects from a poor economy in China, a major consumer nation.
Art Magee of Houma Distributors, a clearinghouse of specialty goods used in the oilfield doesn’t pretend to know when change will come.
He does know that the oilfield’s economic downturn has resulted in his company laying off two workers in Houma and others in Morgan City.
“The price of a barrel is low, the oil companies are cutting back bare bones and that trickles down to everybody we supply,” Magee said Monday. “It all trickles down when they stop spending.”
Magee said it was painful to lay off good, loyal employees, and that the decisions were not easy.
“It’s always difficult, especially if it’s good people,” Magee said. “It’s nothing they did wrong, it is the economics. They understood that, they could see how the business slowed.”
Magee is confident that the service economy will rebound.
“It will come back, it always does,” said Magee. “But the longer it stays down the more hurt you are going to feel. Six years ago when there was a dip it wasn’t so bad, because it only lasted a few months and the price went back up.”
Magee’s company has been in business for 67 years and withstood crises that included the oil bust of the 1980s. He says times like these are going to more sorely effect companies in heavy debt or otherwise unable to access cash reserves.
“Batten down the hatches,” Magee said when asked what he would advise newer business owners. “If you are a young company you are going to have a hard time.”
Mark Hoskins is the human resources Manager for Leevac, a Houston-based shipyard with a branch in Houma, where some workers have been laid off.
“Things are slack and we are hoping that the price of oil goes back up soon, and knowing also that it may not, and that it may still be going downward,” Hoskins said. “We are not getting new work behind what we were already working with. A few jobs here and there are thinning out. We have lost less than a handful out of hundreds of employees.”
Businesses that provide services and goods to the service companies are seeing signs of a work slowdown, expressing concern though not alarm.
“It’s pretty clear that there have been reductions in staff on existing vessels and in some that might otherwise be utilized,” said Vince Cannata, owner of Cannata’s Family Markets.
Cannata has a bird’s eye view of change in the oilfield; his stores sell box-loads of groceries to oilfield vessels.
So do the Frank’s Supermarkets in Lockport, Larose and Golden Meadow.
Franks’s president, David LeBoeuf, agrees with Cannata’s assessment.
“We just started seeing it a little bit last week, it was the first significant drop,” LeBoeuf said. “It is just starting to trickle down to us. I’ve been in this a long time, I know it is a cycle and I am confident it is going to come back. Nobody really knows the duration.”
Business owners and oil industry association spokespeople interviewed Monday were in general restraint with their comments. There are fears that panic generated through discussions of he local dilemma could be bad for businesses overall.
But all eyes are on the pumps, and on the market.
Suzanne Nolfo Carlos, president of the Houma-Terrebonne Chamber of Commerce said she is aware of some layoffs.
“Some companies are having a hiring freeze, some are holding steady,” she said.
“But some other companies are hiring, and so some of the people are getting jobs in other places. People are really nervous which is understandable with what we have been through. We are saying our prayers that oil prices rise.”
Laid off workers, Carlos said, should be sure to file for unemployment benefits as quickly as possible. Staffing companies, she said, are a good place to go for jobs.
Although there is an overall slowdown, Carlos and other business leaders say, the deep-water exploration that was so affected by the moratorium on drilling after the Deepwater Horizon oil spill in 2010 continues
Employees who are laid off, Carlos said, should be sure to make arrangements for recommendations.
“Do get recommendations, because a good, loyal worker can always get a job,” she said.
It is partly because of a desire to be considered for re-hiring and not to raise concerns for employment they now seek which has laid-off workers wary of publicly being identified regarding their experience.
A Houma man who worked at a company for 10 years and got a pink slip recently is among them.
“I lost my job, so I lost my health insurance,” he said. “We all knew it could happen we just didn’t expect it to happen so fast. When I learned there was no notice. I just felt my stomach drop out.”
With oil prices continuing to plummet, oil and gas industry experts and business leaders say they don’t see an oilfield apocalypse in their crystal balls. But they don’t see indications of a bounce-back, either.
