Friday, June 21, 2024

Scott: Not all economic challenges are COVID-related

by BIZ Magazine

COVID-19 was not kind to Shreveport-Bossier’s economy, but the pandemic’s effects were magnified by several key losses, says a state economist.

Dr. Loren Scott, professor emeritus of economics at LSU, recapped the economic numbers of 2020 during the 39th Annual Louisiana Economic Outlook hosted by the Port of Caddo-Bossier in mid-September. The event was sponsored by the Committee of 100.

“Your community took a hit from not only COVID, but some things that are not COVID-related,” said Dr. Scott. 

He noted the Shreveport-Bossier Metropolitan Statistical Area (MSA) took some permanent hits in 2020. 

Specifically, Libbey Glass is shutting down by the end of the year, taking 450 jobs with it. Another hit was that the DiamondJacks Resort and Casino closed during the COVID-19 outbreak and did not reopen, equating to a loss of 349 jobs.

“That Libbey Glass loss is a big number for any MSA, but especially for one of your size,” Dr. Scott explained. “The Casino sector has been in a decline since 2014 because of competition from Indian casinos in Oklahoma.”

He then warned, “It will be very interesting to see where that (DiamondJacks) license goes. I doubt it stays in your area, I don’t know where it will go, but I doubt it stays in an area which has been declining for some time.”

Dr. Scott also noted the closure of the Dolet Hills Mine and Power Plant in Mansfield, which will result in a loss of 243 jobs. 

He went on to highlight some “temporary” knocks to the Shreveport-Bossier MSA’s economy in 2020.

Benteler Steel dropped from 530 employees to 158 due to lack of production for pipes used in oil and gas production. 

BJ Services, a fracturing firm in the oil and gas industry, announced in early August it is laying off 273 people and filed for Chapter 11 bankruptcy. 

Cactus Wellhead, another oil and gas service industry, is laying off 42 people.

These negative changes were knock on effects from oil prices falling from $60 in early 2020 to  a historic low of $-38 this spring caused by oil futures. The good news is that the price of oil had rebounded to $40 per barrel by the end of June.

The reality of these losses adds up to a historic downturn for the area.

He explained that following the majority of estimates, the state will get back 72% of what was lost in the first half of the year.

Applying that to the Shreveport-Bossier MSA, that is going from -23,100 jobs to -10,600 jobs, an overall decline of -5.9%. 

That would make this year’s dip the worst downturn since the oil crash in the 1980s. 

“Notice that the 1980s downturn occurred over four years, this downturn was over four months,” said Dr. Scott. “Your community is the third hardest hit in Louisiana by percentage, primarily because of the permanent losses you suffered from Libbey Glass, DiamondJacks Casinos and Dolet Hills.”

However, when looking ahead to how things could turn around for the Shreveport-Bossier MSA, Dr. Scott gave the caveat that forecasting the rest of 2020 and 2021-22 is difficult. This, he said, is due to uncertainties over a vaccine for COVID-19 and the 2020 presidential election.

“Prospects are starting to look good that we have a vaccine by the end of this year or first of 2021, which is remarkably fast,” he said. “I feel this will be one of the most consequential presidential elections in our history. We can really go in some very different ways.”

He continued, “It’s important to us because candidate Joe Biden wants to ban new oil and gas permitting on public lands and waters and modify royalties to account for climate change costs. What that means is that he might as well say we’re not going to have any more lease sales. If you totally shut that down, you’re going to shut down drilling in the Gulf of Mexico. That means you can shut up shop in the Houma and Lafayette area.”

– BIZ. Magazine

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