PORT ALLEN - A worldwide glut in oil production has caused prices to drop, bringing relief to drivers at the gas pump but raising concerns about the long-term impact on Louisiana’s energy industry.

Gas prices are projected to fall to around $2.80 a gallon, the lowest level since 2020, while oil currently averages about $56 a barrel on the international market.

“I think it’s getting a lot better myself, I think it’s doing a lot better,” said one driver at the gas pump.

The oil and gas industry remains a significant part of Louisiana’s economy, and falling prices create a mixed picture for workers and companies alike.

“You’ve seen oil go from that $80 high under Biden down to about $57 now under Trump,” president of the Louisiana Oil & Gas Association, Mike Moncla, said.

Lower oil prices mean reduced profitability for energy companies, which can slow drilling activity.

“Lower prices is lower profitability for the oil companies. In turn, they don’t use the service companies as much,” Moncla explained.

While mass job losses haven’t happened yet, he added, prolonged low prices could put local energy jobs at risk.

“Oil companies stop drilling. Those service companies park their rigs and have to send people home,” Moncla said. 

Industry leaders say natural gas is helping balance things out in Louisiana, where rising natural gas prices have kept rigs active.

“In Louisiana, though, we’re up rigs because the natural gas prices have gone up,” Moncla said.

Experts also note that technology improvements mean fewer workers are needed to produce the same amount of oil or gas as in previous decades.

“The number of workers we need today to produce the same barrel of oil or the same MCF of gas is just a lot lower than it was in prior decades,” said Greg Upton, executive director of LSU’s Center for Energy Studies.

While oil prices surged after Russia’s invasion of Ukraine, recent declines have already led to some job losses. Upton estimates that about 1,000 jobs were lost in upstream oil and gas extraction and services over the past year.

But there is a silver lining for consumers. “The consumers are going to benefit from that. And so what we’re seeing is inexpensive gasoline prices today,” Upton said.

Uncertainty is nothing new in the oil business, and experts say the long-term impact on Louisiana’s energy sector will depend on how long prices remain low.