Hangover

Gonna be a fun special session

Louisiana's current budget hole that must be filled by June 30 is $870 million -- even worse than Gov. John Bel Edwards has been saying for the past several weeks.

"For all practical purposes, Louisiana is in its own recession," said Greg Albrecht, the Louisiana Legislature's economist that predicts the state's tax collections.

The even-larger-than-expected problem means the budget cuts and tax increases being considered to solve Louisiana's budget crisis may have to be more aggressive than originally proposed.

In other words, we are "bucking the trend" but in a very bad way.  We've been talking about this for a while but, just for review purposes, here are some links from the past month or so.

December 22 

A year of tumbling oil prices has caused thousands of job losses throughout Louisiana, slowed energy production, delayed new investment, and sent state and local officials scrambling to plug budget holes created by the industry’s latest boom-or-bust cycle.

As prices sank below $35 per barrel last week to hit six-year lows, the latest federal jobs numbers had a grim look: Louisiana’s sector that includes oil and gas jobs lost more than 10,000 workers — nearly 19 percent — in the 12 months ending in November.

That’s the lowest point since the U.S. Bureau of Labor Statistics began using its current tracking system in 1990.

“Every day, I hope we hit bottom, until we get up the next day and realize the bottom is (lower) than we thought,” said Lafourche Parish President Charlotte Randolph, whose sales tax revenue fell nearly 14 percent in the first 10 months of the year.

Talk around holiday dinner tables throughout Louisiana is certain to include questions about whether the state is headed toward another devastating recession along the lines of the 1980s oil bust.

January 19

National Oilwell Varco, a manufacturer and parts supplier to the oil and gas industry, is shutting down its Houma facility and laying off the 80 employees that work there.

Layoffs at the facility started Monday, the Louisiana Workforce Commission said, and will continue in phases until NOV shuts down sometime between March 7 and March 21.

Officials with the LWC said they will provide re-employment services to the affected employees, including information on unemployment benefits, résumé help and job-searching tools. Houston-based NOV said it will provide workers with additional pay and benefits because they were unable to provide sufficient notice of the closure “due to economic reasons.”

January 21 

And on Wednesday, oil prices resumed their slide; the price of a barrel of crude oil reached the lowest level since May 2003. Crude oil was down 6.7 percent, to settle at $26.55 a barrel in trading for February futures on the New York Mercantile Exchange.

Royal Dutch Shell warned on Wednesday that it expected its profit for the fourth quarter of 2015 to be about half of what it was in the comparable period a year earlier.

In addition, traders see no signs of the oil glut easing, as Iran has permission to sell into the world markets now that sanctions have been lifted as part of a nuclear deal.

January 28

Nucor Corp. has written off $84.1 million worth of engineering and equipment for a proposed $1 billion blast furnace in St. James Parish, but the company may still build one.

The blast furnace was part of a massive, multiphase $3.4 billion steel complex Nucor hoped to build in St. James. The state had promised the company $160 million in incentives if all the phases were built.

Nucor already has built the first phase of the project: a $750 million, direct reduced iron plant in St. James that employs 170 people.

But the uncertain commodities market hampered those plans, and Nucor missed a year-end deadline to give the state its final investment decision on the complex.

 February 8

Noranda Aluminum Holding Corp., parent company of Noranda Aluminum in Gramercy, filed Monday (Feb. 8) for voluntary bankruptcy protection in federal court. It filed under Chapter 11 rules that would let it restructure its business operations.

The company said it will continue to operate its Gramercy refinery but will would no longer be shipping the Gramercy refinery's product to the company's New Madrid, Mo., aluminum smelter. The change will require the company to find another buyer for its alumina, "along with achieving additional cost reductions and maintaining the company's bauxite business as a secure source of supply."

Get ready for an ugly fight in Baton Rouge this year... and every year for a while, to be honest.