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LNG outlook remains strong

Posted by: George Swift on Tuesday, September 3, 2019

Recent news reports indicate that some LNG projects will be delayed due to world market conditions and potential tariffs on China.

Recently, Dan Groft has joined McNeese State University as director of the H.C. Drew Center for Business and Economic Analysis, assistant professor of economics, and economist for The Alliance. Groft, an economist with a Ph.D. in economics from LSU, has worked with Louisiana Economic Development and most recently with the La. Department of Revenue.

We asked Groft about the current LNG market:

GS: What do you make of the reported delays in some LNG projects?

DG: These new developments are simply a part of the decision-making process for firms as they come to a final investment decision. These types of delays are not uncommon when dealing with investments of this magnitude; especially those that will have global implications for energy markets. The uncertainty in the global economy, oil and gas markets, and trade tensions with the largest potential customer of LNG make this news of potential delays in financial investment decisions expected.

GS: How long could these delays last?

DG: It is important to note these delays are not indefinite. It has been reported some decisions are just being pushed back to next year so any benefits Southwest Louisiana sees from these projects would just be delayed for a short period of time. President Trump has stated that China negotiations will reconvene shortly and both parties will be talking “very seriously.”

In the long-term, the move to natural gas as the go-to energy source will most certainly occur and our region stands to benefit from that in the short and long-run. The Lake Charles area has already demonstrated substantial, sustained growth over the past five years according to all the latest available data pointing to it as one of the fastest growing economies not only in the state, but the country.

The area had the fastest growing employment every year throughout the state since 2014 (averaging annual growth of about 4.8% a year over that time) and the lowest unemployment rate in the state every year since 2015 (averaging an annual unemployment rate of 4.5% over that time period). Lake Charles has also had the fastest growing real GDP in the state every year since 2014, averaging annual growth of 6.9% and more than doubling the average growth rate of the next highest area. It also ranked in the top 20 of all 383 metros areas in the United States for GDP growth each year from 2014 – 2016. The area has also had the highest real GDP per capita in the state every year since 2012.

The Alliance will continue to closely monitor developments related to these projects and assess the effects of any changes.

Loren Scott, LSU economist emeritus will present his annual Louisiana Economic Outlook at 5 p.m. Sept. 24 at The SEED Center, sponsored by IBERIA Bank, The H.C. Drew Center, and The SWLA Alliance. There is no charge but RSVPs are required due to limited seating. RSVP to dmonceaux@ allianceswla.org.

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