Louisiana Oil Prices Crucial to Pinnacle
While several gaming analysts predict a strong 2009 for Pinnacle Entertainment(PNK: 9.30 +2.09%), based as much on Louisiana’s energy driven economy as other factors, at least one expert foresees potential softening of the Gulf Coast economy as troublesome for the regional casino company.
Steven Kent, a gambling industry analyst for Goldman Sachs, said declining energy prices might affect the profitability of Pinnacle. Kent had downgraded Pinnacle from “Buy” to “Neutral” earlier in the month.
But oil industry experts say that the decline in oil prices have put sweet Texas crude, the grade of oil found along the coast of the Gulf of Mexico, in high demand. Lower prices had made transport of oil a more significant factor, leaving Texas crude in a rare position of being cheaper than the more-easily drilled foreign oil.
So, even as oil prices worldwide drop, domestic production is seeing higher demand. Further, the new initiatives in Congressional legislation encouraging domestic development can only help Louisiana’s oil and gas industry.
A continued growth in Louisiana industrial revenue can only be beneficial to Pinnacle Entertainment in the long run.
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