SHREVEPORT, La. (KTAL/KMSS) – One of Louisiana’s largest employers has laid off nearly a quarter of its workforce and more than half of companies report bankruptcy or closures are likely. This according to the Louisiana Oil and Gas Association.
The industry has been hit hard by several unexpected factors that cause rippling economic effects throughout the state.
Nearly 35-thousand workers are employed through oil and gas, according to the Louisiana Workforce Commission. As a whole, the industry has reached a point of massive layoffs, furloughs and salary cuts.
The president of the Louisiana Oil and Gas Association calls it a “perfect storm” that has created an “unprecedented challenge.”
“It started with Russia and OPEC deciding to flood the world market with oil which drove prices down by 30-percent by a weekend and then the COVID-19 pandemic that is shutting down the economy worldwide has led to a historical decrease in the demand for oil. Driving down prices down all below zero at one point,” said Gifford Briggs, LOGA president.
Briggs said companies have laid off 23-percent of their workforce with another 27-percent projected in the next 90 days. A quarter of companies received emergency loans from the Small Business Administration, but more than half reported it was not enough to keep employees. The amount of lost wages from layoffs is projected to be $730-million.
“People will ask how does this compare to the 1980s’? The feedback that we’re getting from our members is this is much worse. The prices are much lower, the cuts are much deeper, there’s no storage. Just the overall challenges created by the economy and shut-in are much greater,” Briggs said.
He said a storage problem is also growing since there’s more supply than demand right now. Oil and gas workers are feeling the first effects of the industry in downturn. Which brings in millions in state revenue.
“Shreveport and that region is absolutely going to feel the downturn both from a loss of production, a loss of work, a loss of wages. Those dollars that would normally ripple through the economy aren’t going to be there so everyone is going to feel it,” Briggs said.
Briggs said almost every company that is a LOGA member has reported concerns about the future of their businesses.