The Realistic Advantages of Oil Investments
Investors in the oil and gas industry regularly speak of the profitable advantages of their investments. Before engaging in an investment, however, it is important to analyze the various benefits of oil & gas investment, as well as the potential levels of financial risk. This will allow you to more effectively reach your financial goals.
One of the predominant benefits of oil & gas investment is that of an advantageous U.S. tax system. According to Newsweek, investing in oil drilling operations is an excellent investment – 65% to 80% can be written off in the first year of many investments, while others have a 100% tax-deductible status. The investor’s share of the drilling operation’s expenses, including tangible & intangible drilling and completion costs, as well as the depletion allowance and alternative minimum tax make these investments very favorable.
Additionally, governments throughout the globe recognize the value of oil & gas investments in supporting a vibrant economy in their countries. Thus many governments are encouraging drilling by offering special tax concessions.
Many investors often speak of the high financial rewards of oil & gas investment.
Certain options provide excellent rates of return within a year, with some investments reporting a 10-to-1 return.
Over the years, as a direct result of advancements in technology, the risk factor in initiating drilling projects has been greatly minimized. Many projects regularly have a 90% rate of success.
Another factor to consider is that there is a much larger choice of small drilling prospects than there were in the past. This allows a potential investor to have more options in considering an investment. Additionally, drilling operations are benefitting from decreasing drilling costs.
A huge advantage to oil & gas investing is the continual expansion of the fossil fuels energy market. The demand and consumption of petroleum products has been consistently doubling every ten years, a trend which will arguably continue for years to come. This is due to the lack of effectiveness in producing viable alternative sources of energy that are still in the development stages.
In today’s economic environment, many of the traditional sources of money have depleted, leaving a high demand for individual investors who stand to gain immensely from these investments.