Lower oil prices could lead to thousands of layoffs
This part of the CBS Evening News' ongoing series on the effects of lower energy prices. Our first installment covered the impact on air fares and our second covered the auto-industry's gains. The report below presents the threat of layoffs in the oil industry.
NEW ORLEANS -- The sparks are still flying for makers of drilling equipment in Louisiana, but the outlook has started to dim.
Chris Aston runs Cajun Cutters, which has had to lay off two of its 90 employees in the last month. He told me he started to sense things were cooling down within the last two months.
"I find that the oil companies can probably survive at rates above $60, $70 a barrel, but until they see something steady, they're going to put some of their larger projects on hold," Aston said.
Oil and gas revenues account for about 14 percent of Louisiana's budget. For every dollar the price of oil drops, the state loses $10 million to $12 million. In the nation's largest oil producing state, Texas, ten percent of jobs are in oil and gas. Low oil prices could mean 30,000 of those jobs could go away.
But along the Gulf Coast, shrimpers are seeing smooth waters ahead. I spoke with David Chauvin, the owner of three shrimp boats, who's welcoming the drop in oil prices.
"We've seen people jumping out of the oil and gas industry into fishing because it's more profitable," he told me.
Large boats can hold 10,000 gallons of fuel - which is about 75 percent of their expenses. Chauvin says he's saving about $6,000 per trip, and gaining an edge over his stiffest competition.
"The number one challenge in this industry is definitely imported shrimp, Chauvin told me. "So this year, as imports start to flood into this country, we'll be much more competitive than we have in the past."
Louisiana officials say so far, job losses seem to be offset by hiring in other industries such as ship-building. The concern is the longer the price of oil remains at this level, the deeper the cuts could go.
