factors affecting the louisiana economic outlook, national and state factors (including the oil...
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Factors Affecting the Louisiana Economic Outlook, National and State Factors (including the Oil Spill)
presented to Louisiana Industrial Development Executives Association
Jim RichardsonLouisiana State University
October 28, 2010
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National and Global Projected Economic Conditions
Economic Conditions 2010 2011 2012
Gross Domestic Product 2.6% 2.4% 2.5%
Inflation Rate 1.5% 1.9% 2.3%
30-Year Fixed Interest Rate 4.9% 5.6% 6.0%
Oil Price Per Barrel $75 $80 to $90 $80 to $90
Natural Gas Price per thousand cubic
feet$4.83 $4.50 to $6.00 $4.50 to $6.00
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Policy Environment in which Projections are being Made
Current tradeoffCurrent tradeoff
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National Risks and Uncertainties• Health Care Reform
– Benefits (pre-existing conditions, retirees between age of 55 and 64, children up to age 26, preventive care with no copay)
– Mandates (must purchase insurance if in affordability category)– Planned reductions in Medicare– Taxes, pricing decisions, and health care exchanges– Significance of Secretary of Health and Human Services– Changes being phased in from 2010 to 2018
• Energy Policy– EPA and its rulings– Cap and Trade Bill in Congress
• Extension of Tax Cuts– 2001 and 2003 tax cuts– Marginal tax rates, dividends and capital gains, estate tax, AMT, Marriage Penalty
• Overall Status of Economy—both national and global• Long term concerns about federal indebtedness—gets to entitlements
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OIL SPILL AND MORATORIUM/OFFSHORE REGULATIONS
Risks and Uncertainties Specifically Related to Louisiana
but can spread to rest of country
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Sectors Affected by Spill and Policy Reactions
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Gulf Commercial Fisheries
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Size of Sector• LA Commercial fishing
licenses: 11,191
• 2008 dockside value of $275 million– Estimated total annual output
of $660 million – Estimated total state tax
revenue of $12 million– Estimated total local sales tax
revenues of <$10 million
Coastal Parishes• 15 coastal parishes: 7,959
– With >$10,000 annual catch: 2,657
• May 2010 trip ticket data– Crab: 14% drop– Menhaden: 82% drop– Oysters:43% drop– Shrimp: 49% drop
• Oyster beds hit hardest• Long term effects?
10/28/2010 8
Louisiana Commercial Fishing
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Estimates of Oil Along Gulf Coast Tourism Impact
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Source: New York Times/NOAA
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Louisiana Tourism
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Composition of Direct 2008 LA Travel &Tourism Value Added by Sector
Rank Industry Direct* % of Total
1 Food Services & Drinking Places $1,121 19.4%
2 Amusement- Gambling & Recreation $751 13.0%
3 Accomodations $688 11.9%
4 Real Estate $479 8.3%
5 Construction $373 6.4%
6 Sightseeing Transportation $352 6.1%
7 General Merch Stores $335 5.8%
8 Transportation Services $273 4.7%
9 Misc Retailers $225 3.9%
10 Gasoline Stations $217 3.7%
All Others $973 16.8%
Total $5,787 100.0%* Millions 2008$
Source: 2008 Tourism Satellite Account.
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Size of Sector• 2008 total employment:
144,900
• 2008 direct spending: $9.5 billion – Total annual output of $15.6
billion – Total state tax revenue of
$864 million– Total local sales tax revenues
of $330 million
Coastal Parishes• 15 coastal parishes: 36,664• Saltwater Fishing—about
500,000 persons per year• $408 million in annual
spending for outdoor tourism in coastal parishes
• Louisiana Wildlife and Fisheries openings pending
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Louisiana Tourism
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Oil and Gas Activities
1. Moratorium on Deepwater Drilling for six months as imposed by U.S. Department of Interior—now lifted but must look over regulations
2. Environmental and Safety Rules as Provided by Bureau of Ocean Energy Management, Regulation, and Enforcement
1. BOEMRE—remove 650 platforms and plug 3,500 wells2. Drilling Safety Rules—proper cementing and casing practices; appropriate use of
drilling fluids, independent review of well design, construction, blowout preventer---reviews signed by Chief Executive Officer subject to criminal penalties
3. Workplace safety rules4. Other rules in the offing.
3. Overall energy policy
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Employment Growth By Region2000 to 2008
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Estimated BP Payments of $1.6 billion for Claims October 2010
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Cleanup and Remediation
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• $9.5 billion reported cost to date– Peak resources: 46,000 people, 7,040 vessels and
121 aircraft– Current resources: 25,200 people, 2,600 vessels
and dozens of aircraft
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10/28/2010 18
Cleanup and Remediation
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LA Net Effect of Oil Spill?
Disruption in LA Economy• Industries Affected:
– Commercial Marine Fisheries annual dockside value: $275 million
– Outdoor tourism in coastal parishes annual spending: $408 million
Boost to LA Economy• LA Claims to date:
$527 million• LA spending on clean-up
and remediation: $9.5 billion
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State Economic Projections
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Economic Growth ProjectionsLouisiana, Metros and Rural
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Factors Affecting the Louisiana Economic Outlook, National and State Factors (including the Oil Spill)
presented to Louisiana Industrial Development Executives Association
Jim RichardsonLouisiana State University
October 28, 2010