Falling Oil Prices Expose Bobby Jindal’s Failed Conservative Economic Policies

Fire boat response crews battle the blazing remnants of the offshore oil rig Deepwater Horizon, off Louisiana, in this April 21, 2010 file handout image. (Reuters/U.S. Coast Guard/Files)

Fire boat response crews battle the blazing remnants of the offshore oil rig Deepwater Horizon, off Louisiana, in this April 21, 2010 file handout image. (Reuters/U.S. Coast Guard/Files)

Most people around the United States are probably ecstatic at the low, low price of gas right now. Looking at Gasbuddy.com, most of the country is under $2.61 a gallon and some areas in the Midwest are almost a dollar less than that. Here in Lafayette, I passed one gas station this morning that was at $1.79 per gallon. It’s actually costing me the low price of about $20 to fill up my truck right now which I haven’t been able to do since 2009 during the Great Recession.

The low prices are a boon to consumers, with estimates of up to $300 billion in savings predicted if prices stay the way that they are. These savings would boost consumer spending in other areas, further stimulating the economy which is already doing quite well. Sounds like a win-win situation for everyone, right? Not quite, at least not if you live in Louisiana or work in the oilfield industry.

Here in the southern part of Louisiana, thanks to decades of conservative policy makers, the economy is almost completely dependent on oil production and tax revenues are as well.

Louisiana is facing a projected $1.4 billion shortfall in the state budget next year. Cuts to higher education alone could total $384 million, a figure that is larger than all the public funding for the state’s community and technical colleges currently.

The problem will get worse if oil prices continue to drop. With Gov. Bobby Jindal on his way out, several legislators said they are looking to Louisiana’s four major gubernatorial candidates in 2015 to provide details about what they might do to fix the state’s budget woes.  (Source)

The problem for Louisiana is that for all of these years (and not just under Bobby Jindal) it has done very little other than to pimp itself out to the oil industry. Exchanging low, low tax rates in return for bringing in industry (and possibly some bribes, this is Louisiana after all!), the state government has been content to let push much of the tax burden off onto the private citizens, collecting much of their revenues through the residents of the state – or collecting handouts from the federal government to balance their budget.

While this has worked for them in the past, a crash in oil prices will expose the vulnerability of the Louisiana economy and the fact that the conservative economic policies of Jindal and his predecessors are a failure.

Sales and personal income taxes are actually much bigger portions of the state general fund — the pot of money that pays for services like health and higher education — than oil and mineral revenue. In some ways, their stability is more important than the price of oil. If there is good news, it is that sales tax for the year — at least so far — looks like it might be a bit higher than originally expected.

“We are running a little ahead on sales,” said Greg Albrecht, chief economist for the Legislature’s fiscal office and one of two people who does the official state revenue estimates for Louisiana.

Still, for every dollar the average price of oil per barrel drops, Louisiana state government loses around $10 million to $12 million. A slight uptick in sales tax collections will not make up for the large drop in the oil prices that is currently underway. (Source)

If prices stay this low, Louisiana’s history of sticking it to the citizens of the state and not the corporations is about to blow up in their faces big time. If you read through the budget, something I did in this article, you’ll see that Louisiana collects more off casinos than they do corporate taxes. Republican lawmakers across the country are constantly harping on how we need to cut corporate taxes to stimulate the economy, which ends up shifting the burden to individuals instead and Louisiana is an example of this taken to an extreme. The ratio of revenue from taxes on private individuals versus corporate taxes is absolutely unfathomable to an outsider, but a lot of these taxes are collected off people who work in the oilfield which is suddenly in a layoff mode due to falling oil prices. Not only are oilfield workers being laid off, but these layoffs will create a ripple effect across the economy leading to job cuts in other sectors, including the state government where budget cuts are under way.

Louisiana lawmakers will beg for even more federal money to close their budget gap once again, all while Bobby Jindal criticizes President Obama as he gears up for pandering to voters in the 2016 Republican presidential primaries. Bobby Jindal will hit the campaign trail in Iowa and New Hampshire blaming President Obama for not doing enough for the economy, all while his own state faces the possibility of massive economic collapse and job losses. It’s one thing to discuss this pending economic carnage from behind a pundit’s desk in New York or San Francisco, but to watch this up close and in person is a truly eye-opening experience.


Facebook comments

  • BobJThompson

    The republicans plan to fix this oil boom. Via exporting oil to the world market. Forward thinking and expert planning says me.

    • Eg Kbbs

      If you have a limited resource which is vital to yourself, does it make sense to send it to other countries. Not to mention until less than a year ago the repubs were complaining about high gas prices (despite the highest being under Bush) and how China was taking all the oil away from us. (Or I could make the assertion that Iraq and Afghanistan were largely so Haliburton could get more oil). And currently they are pushing the Keystone pipeline which will increase oil for other countries at the expense of a huge risk to our own resources.

      • BobJThompson

        I was being sarcastic. I think it’s a horribly stupid idea. People are celebrating and their first thought is “How can I make my backers happy?” We’re tearing up the country trying to get the bits of oil we considered too small or difficult to extract just 40 years ago. And what do these idiots want to do? Sell it to the world. The fact that our country not only elects these people, but continues to allow this kind of behavior shows me daily that our civilization will not live on. It will become a footnote in the history books. Such potential. Wasted.

    • Bill Healy

      You can’t sell oil that’s too expensive to produce…only reason US oil fields were in operation was because the price of oil had gone high enough to make it profitable to start them up again…cheap Saudi oil is putting an end to that…in Tx, ND, La. and every other oil state…Alaska’s state budget was planned based on oil at 115. a bbl it’s now almost $40. a bbl. none of our domestic producers can meet that price…good thing is it knocks the tar sands out of production too…no need for that pipeline.

      • BobJThompson

        I was thinking of tar sands and shale deposits that were passed over in the mid 20th century in favor of sweet, sweet, light crude. Too bad this sort of behavior is going to lead to us not moving off of oil. Cause as a collective, humans suck at thinking ahead. Especially if fixing known issues are going to cause discomfort.

  • Eg Kbbs

    Let’s see, even with several states adding an extra fee if you put up solar panels or get an already expensive electric car, the oil states are tanking with a low cost of petrol. And their policies are still that there is an infinite supply of crude under their soil that will never run out (yeah, right).

    And with conservative policies, I know of at least 3 states that have, under conservative control, given all sorts of breaks to business and are tanking:

    Jindall / Louisiana
    Perry / Texas
    Brownback / Kansas

    And the other states are still trying to imitate their so-called success.

  • Old Top Kick

    And yet, people will continue to elect idiots like this. Because, Murica!

  • Another uncomfortable example of GOP governors who still think Arthur Laffer is a genius and pine for the good old days of Reaganomics. Didn’t work then and it doesn’t work now.

  • And it’s really pathetic that the state’s main source of revenue comes from taxes paid by gambling casinos.

  • Andrew L

    Jindal is a cynical hack pandering to corporations for campaign contributions he’s not even going to get. So sad that our state’s citizens couldn’t see through all the propaganda…unfortunately we get what the majority has asked for: cuts in education, cuts in healthcare(especially mental hc), state funding of radical anti science religious groups(hard to even call them “schools”)…time for the people of our state to wake up, but judging from our recent past I won’t hold my breath.

  • Jim Bean

    I’m confused. Does the Left want to kill big oil because they are greedy and they are destroying the planet or do they want to keep big oil strong because they need the revenue it generates to support their local economies? Or does it just depend on the day of the week?