Gas & oil prices increase; could higher oil prices help Louisiana’s energy sector?
NEW ORLEANS, La. (WVUE) - Prices at the gasoline pump are causing some local drivers to fret. And the cost of oil has gone up as well.
“I think they’re ridiculous, you know,” said a man fueling his vehicle who identified himself as Mr. B. “If they go up, I got to keep on, I got to go to work, you know.”
More vehicles appear to be on roadways as more of the economy reopens amid the COVID-19 pandemic.
Cintrell Rock did not like the gas prices she saw after stopping for gasoline.
“I feel like it’s going to be three dollars before the end of the month. That’s the way it’s looking,” said Rock.
According to AAA, the average cost of a gallon of unleaded regular in Louisiana is $2.62. In some parts of the state, it is over $2.80 a gallon.
Professor Eric Smith, Associate Director of Tulane’s Energy Institute, says part of what is driving the higher gasoline prices is the freezing weather earlier this year.
“Yeah, we lost the refinery production as well as the crude production during the freeze and the system is still catching up,” said Smith.
And more drivers could take to the road during the summer months as part of vacations.
“I think we had a 13-week run here of higher prices but they’re still, you know, considerably less than they were back in 2008, and then in 2012 we had a run of high prices,” Smith stated.
Gasoline is made from crude oil.
“Generally, the biggest single cost of gasoline is the cost of the crude itself,” said Smith.
Oil prices are currently around $60 a barrel.
Mike Moncla is President of the Louisiana Oil and Gas Association, also called LOGA.
“The oil prices have gone up into the $60s, so we have a seen an influx in some activity around the state, which is good for Louisiana,” said Moncla.
He was asked about the type of new activity being experienced by the oil and gas industry.
“You know, just well site stuff whether it be workovers, cement jobs, different service activities at the well site,” said Moncla.
He responded to a question about the major factors that drive oil industry employment.
“Well, it’s going to be well site activity, when I say well site activity, I’m talking about oil companies have a well that has been shut-in that they need to get back working, so they’ll call service companies to go back out to that well site and get that well back working,” said Moncla.
He believes oil prices need to be much higher in order for the state’s oil and gas industry to see a rebound.
“We would need higher oil prices. I mean if oil gets up into the $80s, you know, that might not be great for America, but it would be great for South Louisiana,” said Moncla.
Michael Hecht is President & CEO of GNO Inc., an economic development organization.
“It’s unclear to me how it’s going to translate over time. Without a doubt if demand goes up globally and energy prices continue to be in the profitable range then you will also see people going back into that industry,” said Hecht.
Still, so far this year it appears things are shaping up to be better for the oil and gas industry in Louisiana.
“It’s certainly an improvement from last year if there’s a one-word I guess, but it’s been a long seven years of this downturn and so it’s been a struggle for the oil and gas industry, the oil and gas workers that are out there, you know, trying to feed their families, a lot of them have had to find other jobs,” Moncla stated.
Smith thinks President Joe Biden’s two trillion dollar infrastructure would help to create jobs for the industry, as well.
“That will allow for some pipeline construction, it will allow for some highway construction, all those sorts of things and it will employ a lot of people,” said Smith. “Also included in that is money for the offshore regime to start removing platforms that are obsolete and inactive, so there are going to be some jobs that are added but nobody’s burning down the barn to go out and drill deep-water and spend a billion or two billion dollars on a new platform right now.”
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