Most of us rarely think of southern Louisiana. Other than New Orleans, few of us who live outside the state know much about the region. Lacking white sandy beaches, southern Louisiana has not developed the coastal tourist economy of places like Florida and Alabama. Yet, this region produces shrimp, oysters and other seafood; oil and gas; upon which many people in the United States depend. It also cultivates a spirit which is hard to specify, but that is evident in the generosity and resilience that you find here, is glimpsed in the statistic that, despite negative economic circumstances, southern Louisiana has one of the lowest rates of outmigration in the United States, and is captured in the word "lagniappe" or "something extra."

Shrimp and Seafood

Oil and Gas
Oil was discovered in Jennings, Louisiana in 1901, but it was not until the 1920s and 1930s that drillers attempted to extract oil from south Louisiana's wetlands. The value of petroleum increased during WWI due to its use as fuel for trucks, planes, and ships. During the 1930s, despite the Great Depression, petroleum exploration and production continued, and floating vessels were developed to transport and support drilling equipment in calm, shallow water. By the latter part of the decade, pioneers marched steadily through the Louisiana swamps and out into the shallow waters of the Gulf of Mexico. During WWII, oil was recognized as vital to national security and young men who worked on the seismic and drilling crews active in southern Louisiana were kept home to continue their work.
"Well, when I was a boy..."
"Those workers were poor people..."
"Daddy was a seismologist..."

After the war, the pace of exploration in the region increased and Louisiana began to lease offshore lands. November 14, 1947 has been marked as the official date of the first producing offshore oil well out of sight of land; the structure was run by Kerr McGee and located off the coast of Morgan City, Louisiana. Onshore production of oil and gas peaked in 1970. Offshore activity, too, declined after the early 1970s. By the mid-1990s, though, the level of activity in the Gulf of Mexico increased significantly with the passage of the Deepwater Royalty Relief Act and the rapid expansion of deepwater development. Today, ultra-deepwater facilities operate in waters more than 5,000 feet deep, and the Gulf of Mexico supplies more than 20 percent of the natural gas and almost 30 percent of the crude oil produced in the United States. Analysts estimate that the Outer Continental Shelf (OCS) contains about 19 percent of the nation's proven natural gas reserves and 18 percent of its proven oil reserves. When Hurricane Katrina struck, there were 5,851 active platforms operating in the Gulf of Mexico on a total of 1,356 leases.

The key element in distinguishing offshore from inland activity is "out of sight of land." In the move offshore, the first wooden piers built to support drilling operations over seawater were constructed in 1896 off the coast of California. In the early part of the 20th century, California was a site of active coastal oil and gas development. By the latter part of the century, though, stimulated by the Santa Barbara oil spill of 1969, widespread resistance to oil and gas development had curtailed the offshore industry there. Restrictions in waters off of Florida and the Atlantic states were to follow. Through the boom of the 1970s, downturn of the 1980s, and industry reorganization of the 1990s, the social and political landscape of oil and gas development changed little. A key issue in the 2000 presidential race between Gore and Bush was the promise - made by both candidates - to extend moratoria on offshore development off the coasts of Florida and California. On September 2, 2005, of 96 rotary rigs drilling in U.S. offshore waters, 81 were located off the coast of Louisiana, 10 off of Texas, 4 off of California, and 1 off of Florida.

In 1945, President Truman claimed ownership of the offshore lands and a series of legal battles between the states and federal government ensued. Between 1947 and 1960, the U.S. Supreme Court settled what became known as the Tidelands Cases in favor of the federal government. Because it collects royalty payments from the rigs and platforms located on the outer continental shelf (OCS) on behalf of the federal government, the U.S. Minerals Management Service is the second largest revenue generator - next to the Internal Revenue Service which collects our income taxes - in the country. Revenues from OCS development are managed by the U.S. Office of Management and Budget. Almost $4.3 billion per year, on average, is collected and distributed by MMS from bonuses, rents, and royalties from Federal offshore mineral leases. Of these funds, $3.2 billion per year go to the United States Treasury and the states, $900 million per year go to the Land and Water Conservation Fund, and $150 million per year go to the National Historic Preservation Fund. The MMS also collect revenues from Federal onshore mineral leases (over $1 billion per year, on average) and from mineral rents and royalties to American Indian Tribes and individual mineral owners (over $150 million per year, on average). In the 20-year period from FY 1982 to FY 2002, the MMS disbursed nearly $127 billion to the United States Treasury, States, Tribes and Indian allottees from mineral activities on Federal and Indian lands.

Dissatisfied with the level of compensation to Louisiana, in 1991 the state initiated discussions with Secretary of Interior Manual Lujan concerning revenue sharing to states impacted by the industry. Since that time, regular attempts to increase revenue sharing have been made by Louisiana officials, with the first success coming in 2005.

Another source of revenue to the states, the Land and Water Conservation Fund, is allocated to federal, state and local governments to purchase land, water and wetlands for the benefit of all Americans, with no special consideration given to heavily impacted areas. The allocation for each state and territory is determined by formula based on law and subsequent approval of the "certificate of apportionment" by the Secretary of the Interior. Actual support for the program varies year-to-year based on Congressional appropriations.Between 2002 and 2005, Louisiana ranked 22 and 23 out of 50 states in the apportionment it received with states such as California and Florida which have restricted offshore development receiving much larger shares of the fund. Click here to see the amount allocated to each U.S. state or territory in FY 2005. Allocations for FY 2006 are not yet available, but the President's budget proposed zero funding for LWCF state grants.

The Port of New Orleans

The Port of New Orleans is a deepwater port that has long been a center for trade. It is ideally situated next to both the Mississippi River (a "Maritime Silk Road"), giving it easy access to North America's interior, and the Gulf of Mexico. It was the port and its economic possibilities that helped to make the Louisiana Purchase so attractive to Thomas Jefferson. In 1968, the completion of the Mississippi River Gulf Outlet provided deep-draft access to the port for vessels too large to use the Industrial Canal Lock. This channel, while facilitating economic growth, has been linked to environmental degradation and has been the center of debates concerning coastal restoration.

The Port of New Orleans is an important site for the movement of commodities such as steel and grain, as well as containers and manufactured goods; it holds the top market share in the United States for import steel, coffee, rubber, and natural plywood. Because the port is served by six class one rail lines, users have direct rail access to it from anywhere in the country. Since the early 1990s, the port has invested over $400 million in new state-of-the-art facilities. In recent years, though the oil and gas business has slowed in the port, the maritime business has remained strong (for example, it is the fifth largest site for cruise-ship operations in the United States). The port has significant economic impacts both locally, statewide, nationally, and abroad. Activities in the port employ about 107,000 people and generate around $231 million in taxes statewide. The port also holds the distinction of being the longest linear port in the world, covering 24 miles of the Mississippi River.

For more information:

Austin, Diane E., Karen Coelho, Andrew Gardner, Rylan Higgins, and Thomas R. McGuire
2002   Social and Economic Impacts of OCS Activities on Individuals and Families: Volume 1. Report prepared for the U.S. Dept. of the Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS 2002-22.

Freudenberg, William R. and Robert Gramling
1994   Oil in Troubled Waters: Perceptions, Politics, and the Battle Over Offshore Drilling. Albany: State University of New York Press.

Olien, Roger M. and Diana Davids Olien
2000   Oil and Ideology: The Cultural Creation of the American Petroleum Industry. Chapel Hill: University of North Carolina Press.

Vujnovich, Milos M.
1973 [2000] Yugoslavs in Louisiana. Gretna, LA: Pelican Publishing Company.

Wicker, Karen M.
1977 The Development of the Louisiana Oyster Industry in the 19th Century. Ph.D dissertation, Department of Geography and Anthropology, Louisiana State University, Baton Rouge.

Yergin, Daniel
1993   The Prize: The Epic Quest for Oil, Money and Power. NY: Simon and Schuster.