The Lafayette area may recover all the jobs lost during the COVID-19 pandemic, but it won't happen until at least 2023, economist Loren Scott said.
Speaking during his annual Louisiana Economic Outlook presentation to One Acadiana on Wednesday, Scott noted how Acadiana will get support from its top six employers despite a pessimistic outlook for the oil and gas industry, particularly offshore.
By July, the area had gotten back over half of the jobs lost in the first quarter, data shows, as the second-quickest rebound among the state's nine metro areas. It will pick up 5,400 jobs next year and 1,800 in 2022 as the recovery will be gradual.
“For the last couple of decades you’ve started to bring in industries that were not associated with oil and gas,” Scott said. “I’m at least moderately hopeful that our oil price forecast will turn out to be too pessimistic. The key thing for you folks is what happens with the price of oil.”
The area’s top six employers — Acadian Cos., Stuller, CGI, LHC Group, Waitr and SCP Health — have added employees and are growing, and VieMed could be added to that list in the future, he said.
The annual report is penned by Scott, a long-time economist and LSU professor emeritus, and LSU Center for Energy Studies associate professor Greg Upton. The report relies on state but also national data in combination with interviews of industry executives about future plans. Never, the authors say, has there been so much uncertainty in 39 years of penning the report.
The Lafayette metro had lost 27,100 jobs by the end of April, about one month after the March restrictions began.
Louisiana mandated an emergency stay-at-home order imposed for public health reasons to curb the spread of the coronavirus while global market forces on corporations with U.S. Gulf Coast operations were impacted by lack of consumer demand for petrochemical products such as jet fuel from the state’s refineries.
Likewise, oil and gas extraction companies told trade groups they feared shutting in wells across Louisiana and saw bankruptcy on the horizon despite government support programs.
Statewide, there were 273,200 jobs lost since April 2019 during the first month of the pandemic restrictions, sinking employment to 1.73 million jobs.
As of July, there were 1.83 million jobs across Louisiana, which is a recovery of 18,800 jobs between June and July, according to the Louisiana Workforce Commission.
The Lafayette metro added back 1,700 jobs between June and July for a total of 192,400 jobs total but was still down 10,200 jobs, records show.
In 2019, Lafayette had 204,300 jobs in the metro area but by the end of 2020 there are estimated to be only 193,500 jobs in the market as a result of the coronavirus pandemic.
By 2021, Lafayette is expected to have 198,900 jobs and one year after that grow to 200,700 jobs.
“The last downturn happened over six years, this one happened over six months,” Scott said. “This has been the toughest forecasting market that we’ve ever had to deal with.”
The Lafayette job count is estimated to be down 5.3% by the end of this year from pre-pandemic levels, then grow sluggishly by 2.8% in 2021 and 0.9% in 2022. That means 5,400 jobs would be added in 2021 and another 1,800 jobs in 2022.
Scott’s outlook for the oil and gas industry was significantly more pessimistic than last year when he called for optimism in the Gulf of Mexico with hopes of the price of oil reaching $60 a barrel.
A number of things, he noted, happened since then. Other countries put more crude oil into the market, resulting in the price per barrel dropping to $20 — and at one point negative $38.
Instead of reaching 35 rigs in the Gulf of Mexico, there are now only 12, he noted.
The price of crude this year was $43 per barrel and it is not expected to hit $50 per barrel by 2022, according to the forecast. The potential high by 2022 would be $70 per barrel and low would be just shy of $30 per barrel.
Several oil and gas services companies in Louisiana filed for bankruptcy. In Carencro, Professional Pumping Services filed for Chapter 7 bankruptcy and auctioned off all its assets in June.
Haliburton closed its Broussard office and took 36 jobs with it, while 180 were laid off at ASRC Energy Services Omega, which supports offshore oil and gas operations.
The demand for oil plummeted during the stay-at-home orders as the demand for gasoline has dropped 42%, he noted.
“That’s very important in Louisiana,” Scott said. “We’re the No. 2 refinery capacity state in the nation. Eighteen refineries. Jet fuel demand has not come back, but diesel has hung in there. They (refineries) have really gotten hammered during this time period.”
He noted several things that could change the area’s economic outcomes significantly — if more oil comes on the market, whether or not a vaccine is developed and the upcoming presidential election.
More oil would push the price down, but a vaccine could result in increased travel to accelerate the demand for oil.
The election is also significant, he noted. Democratic nominee Joe Biden has pledged to disallow new drilling on public lands, which includes the Gulf of Mexico.
“Could you imagine what that would do for the Lafayette and Houma economies?” Scott said. “That would be disastrous.”
Staff Writer Kristen Mosbrucker contributed to this report.