Fuel Production Continues To Be Major Economic Driver for Louisiana

Louisiana has long been known as a state with major economic ties to the oil and gas industry.

According to a 2008 New York Times article, “Severance taxes, which are taxes on natural resource extraction and in Louisiana mostly come from oil and gas, made up just over 8 percent of state tax revenue in 2007, according to Census Bureau data, much less than Alaska’s 64 percent, but higher than Texas’ 6.9 percent. The total take, including royalties and leases from oil, gas and other resources, accounts for just under 17 percent of the Louisiana budget.”

In 2008, with the housing and financial markets collapsing in tandem, oil prices dropped dramatically as demand tumbled in the cash-strapped recession. The New York Times noted Louisiana went from having an $865 million budget surplus to a $341 million shortfall in a matter of months.

This oil soaked pelican bears an eerie resemblance to the pelican on the Louisiana state flag.

In 2010, tragedy struck Louisiana in another form with the BP Oil Spill. With national attention focused on the dangers and environmental impact of drilling and refining oil, Louisiana as a state presented mixed feelings to the media. As much as we hate our dependence on oil, as a nation and as a state, we can’t turn our backs on it just yet. What we can do is look to the future and find creative new ways to satisfy our energy needs.

Natural Gas Investments

Last week the state announced that Sasol Limited, a South African energy and chemicals company, is exploring the possibility of building a $3.5 billion to $4.5 billion ethylene production site in southwest Louisiana.  The feasibility study is for building a world-scale ethylene cracker and derivatives complex near Sasol’s existing Lake Charles Chemical Complex.

Gov. Jindal said, “Yet again, Louisiana is the focus of a multibillion-dollar petrochemical investment that underscores the unique advantages of our state’s outstanding business climate and Louisiana’s abundant natural resources. While we recognize that it’s too early to discuss employment and capital investment with certainty, we will aggressively support Sasol’s efforts to create new career opportunities for our sons and daughters here in Louisiana.”

Regarding a separate recent investment by BASF, LED Secretary Stephen Moret said, ” [BASF] joins a growing roster of major petrochemical investments in Louisiana that are being driven by our abundant supply of natural gas, very affordable prices for that supply, and a steadily improving business climate.”


Outside of natural gas, Louisiana is gradually advancing in the biofuels industry. On November 22nd, Sundrop Fuels announced a commitment to build a $450 Million biofuels refinery near Alexandria.

That facility will bring 150 new direct jobs averaging about $58,000, plus benefits, to Central Louisiana and result in an estimated 1,150 indirect jobs in the region. The biofuels plant will salvage wood waste from renewable forests in Central Louisiana and adjacent regions and use that biomass as a feedstock.

Sundrop Fuels also will extract hydrogen from abundant supplies of Louisiana natural gas, combining the hydrogen in a proprietary reactor with carbon extracted from wood waste. The result — up to 50 million gallons of fuel a year — will represent the world’s first renewable green gasoline that’s immediately adaptable to existing pumps, pipelines, engines and transportation infrastructure.

Louisiana Economic Development is openly recruiting new ideas and companies from every corner of the energy and chemical processing industries to evaluate the state’s current resources and opportunities.

It’s clear that no matter what direction energy takes in the future, the state of Louisiana will continue to be a hub for fuel production, keeping the lights on all over the United States.