Oil Prices Heading for $100 a Barrel – How it Affects Louisiana
Maybe one of the reasons people in Louisiana love festivals so much is because of our oil and gas economy. You see, the state's litany of fairs and festivals always include some wild rides. And, if you've ever been involved in the oil patch, you know there is no ride wilder than the one you'll experience in that line of work.
Let's face it, one of the biggest economic factors if not the biggest economic factor in Louisiana's fiscal health is the price of oil. When oil prices are high, things are usually good in Louisiana. Despite the fact that we might be paying a little more for gas at the pump, we don't usually mind. That's because high oil prices usually mean a lot of our people are working.
When the price of oil dips, that's when the "F" word comes into play. No, the other "F" word, furlough. Lower oil prices mean a reduced need for workers and that usually nits the bottom line and below the belts of a lot of Louisiana families.
So where are we now?
Well according to the Internet at 2:21 this morning Central Standard Time. WTI Crude Oil (Nymex) was trading at $90.87 a barrel. That's an increase of .60 cents. Brent Crude (ICE) was trading at $91.64 a barrel. By the time a lot of you are having a minute to read this, those prices will have likely changed.
Naturally, demand is the driving force behind these increasing oil prices. Most of that demand has come in the form of gasoline as more and more drivers are returning to the roadways. That demand could push oil prices to their highest levels in several years.
One economist, Dr Loren Scott told the Louisiana Radio Network that $100 a barrel oil is likely before the end of the year. However, Dr Scott believes that maneuvers by OPEC and another coalition of oil exporters that includes Russia will bring prices back down sooner than later.
The OPEC Plus countries are adding 400,000 barrels a day I think that’s gonna have a tendency to bring the price down below where it is right now.
Those are Dr Scott's words as reported by the Louisiana Radio Network.
So what does the price per barrel of oil have to do with the price per gallon of gas that we put in our car? Again, Dr Scott with the concise explanation.
For about every $10 increase in the price of oil, the price of gasoline at the pump is going to go up somewhere in the neighborhood of 50 cents a gallon.
So, based on a quick check of Gas Buddy gas prices across the state that would mean the current low price of gas in Lafayette, currently $2.90 a gallon, would likely climb to about $3.40 a gallon based on Dr Scott's assessment.
In real people terms, if you have a 16-gallon fuel tank on your vehicle you're looking at a cost of about $46.40 to fill up. If you inflate the price of gas to the estimated $3.40 a gallon you're looking at a fill-up price of about $54.40.
Again this is the classic Louisiana Good News/Bad News scenario when it comes to oil and gas. When the oil prices are up, our people are working. But our working people have to pay more to fuel their vehicles to get to their jobs. It's the circle of life but with gasoline.
Dr Scott in his comments to the Louisiana Radio Network did say that he felt the price increases for oil would be short-lived and while we might feel the pinch at the pump, the state will reap higher tax revenues as many businesses will as well.
And as for the future? A lot of that will depend on the Biden Administration's policies toward oil and gas and the exploration of those fossil fuels. Should politics get in the way of jobs and people working to support their families Lousiana's opportunity for economic growth, as well as the economic well being of our nation, could be adversely affected.
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