Does the oil crash signal another financial crisis?

Falling oil prices are a problem, but it's not the mortgage industry circa 2008

Is a financial storm building?
(Image credit: Dale Wilson/Masterfile/Corbis)

The crash in oil prices has come to Wall Street.

Like any other business, energy companies operate on a complex dance between revenues, borrowing, and investment. They make money by pumping oil out of the ground and selling it. But before they can do that, they have to hire the workforce, build the oil platform, establish the infrastructure, and do the drilling. That means a lot of up-front costs, financed by investment and borrowing. It's worthwhile because ultimately you can pay off your debt obligations once the oil revenue comes in.

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Jeff Spross

Jeff Spross was the economics and business correspondent at TheWeek.com. He was previously a reporter at ThinkProgress.