The pain Lafayette has felt the past year from falling oil prices isn’t likely to end soon, an economic development official said Thursday, but it’s being tempered by a more diversified local economy.
Gregg Gothreaux, president and CEO of the Lafayette Economic Development Authority, said a local business environment that counts health care, high tech and retail among its growth sectors should keep Lafayette from revisiting the oil-depression days of the mid-1980s.
“Despite what you may have heard, there’s still plenty of good news out there about our region,” Gothreaux said at the fourth annual State of the Economy luncheon. The event, held at the Cajundome Convention Center and attended by over 500 businesspeople, was sponsored by ABiz.
Gothreaux said LEDA’s Economic Performance Index, or EPI — which blends reams of information about the local economy — indicates Lafayette was rolling along and posting economic gains each month until 2015 began. He said January, February and March of this year showed the first slowdowns.
“Looking ahead, this momentum will continue until the economy fully adjusts and adapts to lower oil prices,” he said. “Expect this year to be a rough one, with things leveling off in 2016 as the economy regulates to the changes.”
Gothreaux said south-central Louisiana should be “back on track for the same kind of record growth we’ve previously seen” by 2017.
LEDA’s EPI figures show about 1,200 oil and gas job losses over the past year. But shoring up local commerce and jobs are a thriving health care industry, a hiring retail sector and an influx of high-tech companies.
Gothreaux said he expects more oil and gas layoffs but not the number that defined the oil patch of the 1980s, when the industry conducted mass layoffs and lost “a generation of workers.”
The presentation on Thursday stood in contrast to last year’s State of the Economy. Then, Gothreaux said Acadiana’s business sector had produced numbers in 2013 and part of 2014 that rivaled the best ever seen.
On Thursday, Gothreaux struck chords both enthusiastic and cautionary: He highlighted successes during the past few years, including Louisiana luring Bell Helicopter to build a manufacturing plant on the grounds of Lafayette Regional Airport, and persuading high-tech firms CGI, Enquero and Perficient to locate in Lafayette.
But he also said Gulf of Mexico oil and gas producers are now making $66 million less in revenue a day compared with a year ago, lost income that adds up to $11 billion since Jan. 1.
According to the Energy Information Administration, the price of U.S.-produced crude fell from $106 a barrel in late June 2014 to the mid-$40s by January and March 2015. On Thursday, U.S. oil scheduled for July delivery edged above $60. Reacting to the drop in price has seen a reduction in the number of rigs exploring for oil and natural gas, a number that has been cut in half in one year.
Ben Broussard, with the Louisiana Oil and Gas Association, said producers and the service companies that help get oil and gas out of the ground and to the market are struggling. “Get us to $75 oil and you’ll see the rigs come back,” Broussard said.
Jason El Koubi, who heads the nine-parish OneAcadiana, said economic development agencies like his and Gothreaux’s would continue to pursue companies and industries.
“Gregg’s presentation highlights how much progress our community and region have done to diversify the economy since the 1980s,” El Koubi said.