It has always been known that the oil and gas industry only survives by way of debt financing. Fracking is capital intensive, and very few companies involved ever actually even turn a profit in excess of the cost of capital.
Instead, they have always operated by dependency on cheap money from Wall Street banks to finance their drilling and operations.
Fred Nathan is the executive director of Think New Mexico, an independent nonpartisan statewide think tank whose mission is “to improve the quality of life for all New Mexicans, especially those who lack a strong voice in the political process.” Nathan said that the contraction of the oil and gas industry in New Mexico is a “cause for deep concern” for the state budget, because every time the price of a barrel of oil drops $1, the state’s general fund takes a $22 million hit.
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