Recent hurricanes & their effects on Louisiana oil and gas severance tax revenues

Hurricanes Katrina and Rita in 2005, and Hurricanes Gustav and Ike in 2008 heavily curtailed the oil and gas industries in their respective years. The state of Louisiana relies a great deal on severance taxes collected from those industries to meet its budgetary obligations. This study seeks to determine if the severance taxes collected by the state were affected by the hurricanes in question. Economic forecasts for production and tax collections were created through the use of ARIMA models to examine the actual versus projected amounts. It was discovered that the lower production levels caused by the hurricanes had short-term effects on the severance taxes collected, but the long-term implications of those effects were negated by the price of oil which is the dominant factor in determining severance tax collections.