Louisiana’s awkward war dividend
Soaring oil prices generate millions for state coffers
Russia and Louisiana have an odd thing in common: both do better when oil prices rise.
Why it matters: Soaring oil prices resulting from the Iran war mean more money for oil-producing governments and companies in both places.
The details: RedEye estimates that every $1 increase in oil prices brings Louisiana roughly $4 million to $5 million in additional state revenue from production taxes. That is far less than two decades ago, when each $1 increase generated about $13 million to $15 million. Louisiana’s economy is still tied to oil and gas, far less tightly than it once was.
The x-factor: The longer the war drags on, or the longer the Strait of Hormuz remains closed or disrupted, the more likely Louisiana is to keep seeing extra money flow into state coffers.
What it means: War is destruction. People die, and wealth gets burned up instead of used for things that actually improve life, like infrastructure. But in Louisiana, and especially in Baton Rouge, the economics are more complicated. Oil companies and the state government can come out ahead, even as drivers pay more at the pump and some petrochemical companies get squeezed by higher raw material costs.
