The seemingly never-ending free fall for oil prices could eventually bankrupt a third of energy producers, and at least one analyst says the current “bust” is worse than the mid-1980s downturn.$30 is down close to what you might pay for one of the higher-end king cake vodkas available. (Although a recent visit to Rouses suggests that market might be cratering as well.) Anyway the next few years are going to be ugly in state politics as lawmakers fight over pieces of an ever-dwindling budgetary pie.
“The current oil price downturn is now deeper and longer than any other downturn over the last 45 years,” Morgan Stanley analyst Martijn Rats said in a report released Monday.
A year ago, Rats pointed to a number of similarities between the current oil price drop and the one in 1986. “Still, we expected that ultimately such a bearish scenario would not materialise. This has turned out to be too optimistic,” Rats said.
Oil sagged briefly to a 12-year low of less than $30 Tuesday before recovering to $30.44 per barrel. Prices have fallen from more than $100 since mid-2014. Some analysts have said the bottom lies near $10 a barrel.
LSU Center for Energy Studies Executive Director David Dismukes said it’s hard to say whether the current bust could be worse than 1986 for Louisiana.
Louisiana’s budget outlook isn’t rosy.At least now we can say that the new Governor, unlike his predecessor, appears to be taking the problem seriously. Not sure how much good that will do ultimately but it can't hurt. Would be nice if everyone were on board.
That point has been made repeatedly in recent months, as the state stares down a $1.9 billion revenue shortfall.
On Tuesday, members of the state House were given in-depth, blow-by-blow briefings with some of the state’s top budget analysts to prepare them for just how grim things are.
“This is one of the worst times that I have witnessed, myself,” Legislative Fiscal Officer John Carpenter told the chamber.
Much of the budget talk was met with mild interest from House members who mingled about and talked throughout the more than two hours of presentations