Despite Spill, Louisiana Remains Wedded To Oil No other state in the lower 48 depends on the oil business more than Louisiana. Since the 1930s, Louisiana has been heavily taxing oil companies to pay for public services. But the trade-off has been costly, even before the great oil spill of 2010.

Despite Spill, Louisiana Remains Wedded To Oil

Despite Spill, Louisiana Remains Wedded To Oil

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A homemade sign voices support for the oil industry in Houma, La. The BP spill has been called the largest environmental disaster in American history. Spencer Platt/Getty Images hide caption

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Spencer Platt/Getty Images

A homemade sign voices support for the oil industry in Houma, La. The BP spill has been called the largest environmental disaster in American history.

Spencer Platt/Getty Images

Louisiana is married to the oil and gas business, for better or for worse. The energy industry depends on Louisiana to supply 30 percent of the nation's oil supply, and Louisiana depends on the industry as the state's biggest economic engine. But there is a cost, as the Deepwater Horizon has proven.

The wild well spewing millions of gallons of crude into the Gulf of Mexico hasn't dampened Virgil Allen's enthusiasm. Everyday, he stands on the Rig Museum, sweating in his Dickies coveralls, telling visitors great things about the offshore oil industry.

The Offshore Rig That Started A Trend

"In the early '50s, a guy working here in Morgan City came up with the idea for a reusable, movable drilling rig, and this is the rig that he built, the Mr. Charlie," Allen says, motioning to the platform he's standing on. It's one-twelfth the size of the gargantuan rigs now bobbing in the deep Gulf.

With production declining in Louisiana's mature onshore oilfields, offshore is where the action is. An industry study estimates that oil and gas and its support businesses generate $70 billion and 320,000 jobs in the state.

"We have farming, tourism, fishing, shrimping -- I mean, we've got other industries," Allen says, "but nothing close to what the oil and gas industry provides."

The oil and gas industry pervades the culture of Cajun South Louisiana. Note the symbol of Morgan City's annual Shrimp & Petroleum Festival -- a shrimp in a hardhat wrapped around an oil derrick.

Even a harsh critic of the oil business like Clarice Friloux knows they can't survive without it.

A shrimp boat skims for oil in Bay Jimmy, near Port Sulphur, La. Many captains of shrimp boats idled by the massive oil spill have taken on contract work, helping to contain the oil. Sean Gardner/Getty Images hide caption

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Sean Gardner/Getty Images

A shrimp boat skims for oil in Bay Jimmy, near Port Sulphur, La. Many captains of shrimp boats idled by the massive oil spill have taken on contract work, helping to contain the oil.

Sean Gardner/Getty Images

"The people from the bayous always made that connection," Friloux says. "If you were a shrimper and you didn't catch any shrimp, or the price of shrimp was too low, more than likely you'd go to work for the oil and gas."

Friloux's own son, Danny, is a welder on an offshore platform.

She stands next to her mobile home, less than a mile from a giant oilfield waste facility that periodically sickens her community of Grand Bois.

"I'm not trying to stop oil and gas," she says. "My problem with the oil and gas industry is ... they need to find a better way to dispose of the waste."

A Trade-Off Born In The 1920s

They made a trade-off a long time ago in the Bayou State. It started with Gov. Huey Long.

Like no other oil-state governor in America, Long taxed Standard Oil and the other companies that came to Louisiana to stick their straws in the swamp and suck out the petroleum.

"We expect to have this state ruled by the people, and not by the lords and the interests of high finance," Long bellowed in a famous speech.

In the late 1920s, oil company taxes began to help this poor state pay for highways, charity hospitals and school textbooks. By the 1970s, oil and gas accounted for as much as 40 percent of state revenue. Today, hydrocarbons still contribute 14 percent of the state budget.

In Louisiana, the state pays for some things that communities normally pay for -- like fire hoses, sewer lines, traffic lights and water towers.

"These oil companies have, basically, from Huey Long all the way up to [current Gov.] Bobby Jindal, paid for the social services that we have in Louisiana," says Paul Leslie, a historian at Nicholls State University in Thibodaux.

What Louisianans get out of the bargain are low property taxes and good oilfield jobs. Today, a young man out of high school can make $70,000 a year offshore, with full benefits, working only half the year.

But Louisiana has paid dearly for its oil wealth, long before the present Gulf oil calamity.

More than 50,000 wells have been drilled onshore in coastal Louisiana, accessed by 8,200 miles of canals crisscrossing the swamps, marshes and bayous. Experts estimate that mineral extraction is directly responsible for one-third of all the coastal wetland loss and land subsidence.

Massive Leak Puts Trust At Risk

Leslie says under Louisiana's trade-off, Big Oil still rules.

"The oil companies do everything to that state legislature except refine it," he says. "They get their way -- anything and everything that they want."

That may have been the case until April 20, when the Deepwater Horizon blew up. But could the 2010 Gulf oil spill be a game-changer in Louisiana, the way the 1969 Santa Barbara spill was in California?

Chris John, president of the Mid-Continent Oil & Gas Association, which represents the interests of the industry in Louisiana, says rebuilding trust will be hard.

"It's going to be very difficult and it's going to take a long time," he says. "But I believe the industry has created a good relationship in Louisiana. We'll continue to operate, because the state of Louisiana is dependent on this industry, and this industry is very dependent on the state of Louisiana."

The BP Spill And The Oil Lobby

The legislative session that ended this week offers a clue as to whether the energy industry has lost any of its clout in Baton Rouge. After the monstrous impact of the spill became clear, hydrocarbon lobbyists were hard at work inside the marble halls of the state capitol on three major bills dealing with oil and gas issues.

In one gambit, the Louisiana Chemical Association backed a Senate bill that tried to kill Tulane University's Environmental Law Clinic because of its frequent lawsuits against chemical companies.

John Maginnis, editor of, says the bill was gaining steam until April 20.

"By the time it came up, just the whole idea that you're going to shut down a law clinic that's suing on behalf of poor people against big oil companies, well, that just didn't have legs, and that bill was shot down in committee," Maginnis said.

This was the industry's only defeat this session. The two other bills with more profound consequences for the industry went down in flames. One would have imposed a fee on offshore oil and natural gas processed in Louisiana. The other would have allowed the state to hire private attorneys to pursue lawsuits related to the Gulf oil disaster.

Legislative leaders say both bills were bad public policy. Dissidents see darker forces at work.

"Our problem in Louisiana is we've had too many politicians cozy with the big oil companies, without a doubt. Too many duck hunting trips, too many campaign contributions, too many steaks at Chris' Steakhouse," says Foster Campbell, public service commissioner from North Louisiana -- the job Huey Long once held. Campbell says the oil spill provides a rare moment of opportunity for Louisiana's representatives -- both state and federal.

"And not just jumping on BP. Anybody can jump on a dog that's down," he says. "But let's ask the other boys to the party: Why don't you ask Chevron and Shell and Exxon? Now, we know the well's out of control and that belongs to BP. But you guys were out of control when you tore up our coast. Why don’t you pay for some of the damage you've caused to the coast in Louisiana?"

Campbell concludes, "It must be hard to take their money and then kick 'em in the seat."