Business News

Oil prices drop to lowest low since May

by Christiaan Mader

If oil prices keep dropping, our modest recovery will stall.


It was just last week that Louisiana added three new active rigs in the Baker Hughs national count, an early sign that things were looking up for our beleaguered job market. Added rigs mean added jobs, and Louisiana's been hurting from the loss of more than 50 percent of active rigs since the beginning of 2015.

But now some forecasters are concerned that U.S. suppliers have flooded consumer demand. Coupled with reports that producers of refined fuels like butane and propane can’t seem to find buyers for an exploding glut of their fuel, there’s some reason to lean on caution in market optimism.

Economic Pollyannas have predicted that prices would crawl toward $60 per barrel through next year, giving oil-dependent economies like Acadiana some moderate relief. For a hot minute, it sure looked that way. But since a historic rally propped up prices to $51.84 in June, they've trended downward to today’s price of $44.60, the lowest price since May 9.

The Wall Street Journal says the June and July dip is due to over-optimistic production, as suppliers worked to mint new barrels to meet expected seasonal gas guzzling among Americans driving their way to summer vacation.

For now, it seems that traders bet too early on a trend toward an equilibrium in supply and demand. Long-awaited relief for the Acadiana job market, by way of sustained market growth, may yet be around another corner.