Exploding pie

Ray Nagin, 2006: "This economic pie that is getting ready to explode before our eyes is going to be shared equally."

We never figured out how Nagin intended for us to share the pie after he had exploded it. But that doesn't mean we don't get to keep trying.  

Michael Hecht, CEO of Greater New Orleans Inc. (GNO) says it's already evident in New Orleans.  "Some of the empirical evidence that we have of this phenomenon is all the companies that are on-shoring back to Louisiana."   He says multinational companies are choosing our area over emerging markets, due to lower costs and a higher quality of life.

When large investors and multinational companies plan on where to spend money, emerging economies like China or Brazil are usually high on their radar.  But Whitney is recommending that they skip that, and invest instead in places like Louisiana.

"Lower costs, high quality of life, and lower risk is actually making it advantageous to invest domestically right here in Louisiana and New Orleans, than to go abroad.  So I think the on-shoring of what Meredith Whitney calls the smart money is evidence that this is a  real trend," says Hecht.

Whatever Hecht thinks he is on about with regard to "quality of life" and "risk" the real reason analysts like Whitney have their eyes on Louisiana is the oil and gas boom.

Barring an unanticipated setback, so-called “unconventional” oil and gas production is expected to continue to grow over the next two decades. Over that period, the industry is expected to make more than $5 trillion in new capital investment that will support more than 3.5 million jobs by 2035, according to the financial analysis firm IHS Global Insight.

That economic impact of such spending already is spreading, especially to companies that rely heavily on natural gas as a raw material or energy source and investing and hiring.

Steel makers, for example, benefit from both the lower cost of manufacturing and from strong demand for steel pipe used for oil and gas drilling. Companies in the steel rustbelt of Pennsylvania and Ohio are polishing up aging plants to replace coal with cheaper natural gas. Others are setting up shop closer to major gas distribution hubs like Louisiana, where steel giant Nucor is investing $750 million to fire up a new plant later this year.

There is so much investment happening in oil and gas production that you can see the shale gas camps in central Texas from freaking space. (H/T Mark Moseley) That's what's causing the pie to explode in Louisiana right now too.  Along with a few other things, of course.

A 30-inch natural gas line exploded before dawn Tuesday in southern Washington Parish, rocking the rural area and sending a fireball into the sky. No injuries or significant property damage have been reported from the blast, which occurred about 5:30 a.m. in the Enon area south of Franklinton.