It’s striking. GDP correlates with oil in recent years, but not always, so why didn’t the magic of Jindalnomics work?
Expect a comment from Manfred…
Louisiana’s Economic Progress since 2005
Econbrowser
Analysis of current economic conditions and policy
There is something called the Louisiana Watchdog which had a long winded discussion of what your graph shows:
https://www.watchdog.org/louisiana/report-ranks-louisiana-th-for-economic-growth-in-u-s/article_76dba75c-b5dc-11e8-bf09-2bfba4804da5.html
Because offshore gas and deepwater oil — both important industries in Louisiana — were crushed by shales.
https://www.eia.gov/dnav/ng/hist/n9010la2m.htm
You can see the recovery with higher oil prices in Q3/Q4 2018. Current low prices aren’t going to help that.
Did you even look at the graph entitled Louisiana Natural Gas Gross Withdrawals which is what your link shows?
A big drop in the late 1990’s. That is before the shale explosion. That was not helped that much when oil prices spiked from 2004 to 2008 and spiked even more after the late 2008 decline.
Once again Princeton Steve cannot even explain the data he links to. Just wow!
This study is an update of a study done for Mid-Continent Oil and Gas in 1996, and updated
in 2002, 2007, 2010, and 2014 entitled, “The Energy Sector: A Giant Economic Engine for the
Louisiana Economy.” This is one of the first updates conducted when one energy sector—oil and
gas extraction—has been in a serious recessionary mode. Our conclusions from this review of the
impact of the extraction, refining, and pipeline industries can be summarized in a series of bullet
points:
General size of the industry:
Louisiana, through the luck of natural resource distribution, is the nation’s number two
producer of crude oil and the number four producer of natural gas among the 50
states.
Louisiana—with its 18 refineries— ranks number two among the states in petroleum
refining capacity.
There are over 92,000 miles of pipelines transporting crude petroleum and natural gas
within the state and in its offshore area of the Gulf of Mexico.
Total sales, earnings and jobs impacts on the economy:
Through both their direct and multiplier effects these three industries supported $72.8
billion in sales in Louisiana firms, generated over $19.2 billion in household
earnings for Louisianans, and supported 262,520 jobs in the state in 2015. The
$19.2 billion in earnings represented 13.7 percent of total earnings in Louisiana in that
year. This number exceeds the earnings of every single parish in Louisiana. One hundred
of the 211 countries ranked by the World Bank in 2016 have smaller gross domestic
products than $19.2 billion.
On average the job multiplier for these three industries was 4.4. That is, for every job
created in these sectors, 3.4 additional jobs are created in other sectors in the state. The
job multiplier for the oil and gas extraction industry it is about 8.0.
https://growlouisianacoalition.com/wp-content/uploads/2018/04/2018-THE-ENERGY-SECTOR-STUDY_GROW-LOUISIANA-COALITION.pdf
April 2018
Pgl,
As to “A big drop in the late 1990’s”…….
The chart dropped in the late 90s because the Fed EIA changed how it allocated NG production. NG production didn’t drop significantly but OCS (Outer Continental Shelf) produced NG got its own category. (It’s slightly more complicated than that but you should get the point.)
Go to:
https://www.eia.gov/dnav/ng/ng_prod_sum_a_EPG0_FGW_mmcf_m.htm
Click to choose “Federal Offshore Gulf of Mexico” and “Louisiana” then click “Graph”. You’ll see what I mean.
And you owe Steven an apology.
How does shale hurt the other oil sectors.
The cost of shale oil is the marginal price ceiling that other oil producers can raise3 their prices to.
So how does getting a higher price hurt the other industries?
A more interesting comparison is real per capita income in the oil states.
States like the Dakotas and Wyoming have some of the highest per capita income in the nation
while Louisiana is in the fourth quintile of the national distribution.
An excellent point that Princeton Steven will miss entirely as he is all wrapped up in presenting a parade of meaningless statistics that even he does not understand.
Shale’s impact on the gas sector:
In recent decades, western Canada, notably Alberta, and the US Gulf of Mexico were two important sources of supply to the US market. This gas was piped respectively from western Canada and the Gulf in large part to the northeast market, one of the major load centers in the country. In 2007, for example, the US imported a net 10.4 bcf/day via pipelines and took 7.8 bcf/day from the Federal Gulf of Mexico at a price of $7 / mmbtu.
By contrast, in 2018, the US exported a net 2.1 bcf/day and took 2.7 bcf/day from the Gulf of Mexico, at a price of $3.20 / mmbtu. Thus, natural gas revenues from the Gulf of Mexico fell by 84% from 2007 to 2018.
At the same time, US natural gas production rose from 55 bcf/day in 2007 to nearly 90 bcf/day in 2018, with all the gain (and more) coming from shales, in particular, shales in the Pennsylvania Marcellus play, which sits just next door to the major load markets from Washington DC to Boston, far closer than the Gulf or Alberta to the East Coast.
It’s hard to overstate the impact of shale gas — as well as shale oil.
This may be the dumbest reply to a good question EVER! Spencer made an important point that being the fact the the cost of producing shale oil is quite high. When market prices fall, it may reduce the economic rents earned by Louisiana but it literally wipes out shale oil supply altogether.
C’mon Princeton Steven – this is basic economics. Which clearly you do not understand. No – all you do is spew out a lot of data with ZERO relevance to the topic at hand. It is a pathetic waste of time. But it is more than that – it proves without any question that you are a clueless and utterly ignorant person who just babbles BS all the live long day. Try doing something productive – SHUT UP!
Louisiana posts worst economic performance in country
https://www.nola.com/business/index.ssf/2018/05/louisiana_posts_worst_economic.html
Interesting account of why the economy did poorly. Oil and natural gas is part but only part of the story:
“Louisiana posted the worst economic performance among the 50 states in 2017, becoming one of only three states where the economy shrank.Gross domestic product numbers released Friday by the federal Bureau of Economic Analysis measure economic output of each state. The state’s economy contracted by 0.2 percent, getting smaller for the second straight year. Louisiana was hammered by poor economic results in the nondurable goods manufacturing sector, which includes key oil-refining and chemical industries. Those industries are subject to wide swings in year-to-year profitability, based in part on the price of oil. However, a broad range of sectors posted results that lagged the nation, with transportation and warehousing and government also contributing notably to the decline.”
See Fig. 2 :Severance Taxes & Royalties / Rentals / Bonus Payments by Fiscal Year
p 33
https://growlouisianacoalition.com/wp-content/uploads/2018/04/2018-THE-ENERGY-SECTOR-STUDY_GROW-LOUISIANA-COALITION.pdf
Compare to Fig. 1 in the post above.
Did you read this part?
“Other states, either because of the sheer luck of the draw in resource distribution and/or because of innovative development policies, have attracted industries that are veritable dynamos of energy—creating high-wage jobs and spillover business for all kinds of firms. These states not only enjoy the benefits of healthy jobs and income, but also state and local government treasuries get a boost from taxes and fees these industries generate both directly and indirectly.”
Louisiana Was Lucky? That’s the message? Well not so lucky when energy prices are low. Louisiana is too dependent on natural resources. California is an example of a state that relies on innovative development.
having lived in both texas and louisiana, i can say for the common man the oil patch plays a bigger role in texas than louisiana. in addition to the natural resource, houston has attracted the corporate headquarters and high paying white collar jobs of the oil patch. louisiana had those, but lost them to houston a few decades ago. the wealthy oilmen don’t spend their days in louisiana anymore.
I know I am late to the party, only now do I see this blog entry.
Menzie says “so why didn’t the magic of Jindalnomics work?”
First, we have to define what Jindalnomics is or was.
Menzie does not, nor do the commenters.
Manfred: Here you go: https://econbrowser.com/archives/2019/01/jindal-nomics-illustrated