When Should I Invest in Oil and Natural Gas?
You may have heard that both the American oil and natural gas industries have been booming in recent years. You might also have heard that these production increases, to meet demand, signify an excellent window of opportunity for potential oil and gas investors wanting to get in on the ground floor. As a result of all of this, you might be asking yourself “Should I make a move?”
Well, regardless of your answer to that question, the best time to invest in oil and gas is… right now! Energy prices are currently at a record low, and are only going to rise from this point on. Getting in on the oil and natural gas investing game now will give you your best chance at seeing a significant return, especially as 2015 draws to a close with heightened domestic production.
In fact, many experienced investors are hailing the current days as a prime time to begin seeking out oil and gas investments. An oversupply in world oil, thanks to US production and an active Middle East energy sector, have caused prices to fall across the board. And natural gas usage is only going to rise from this point on.
Investors interested in getting into the oil and gas investment industry in the ground floor would be wise to seek out companies with proven track records for producing profits. Directly investing in the oil and natural gas fields is an excellent way to accomplish this, and features the upside of requiring very little (if any) direct action on the investor’s part.
It’s not all sunshine and roses, though. While experts agree that oil prices will increase in the future, the big question of “when?” remains. A long-term perspective is needed when investing in oil and gas, and safety can be found in larger companies with diversified business strategies and bomb-proof balance sheets.
There’s no telling when (or if) the industry will recover to the same level as seen in the last decade, so it pays to do you research and head into any oil and gas investment opportunities well aware of your chances of success.
Oil prices aren’t going to stay low forever, that much is sure. The simple economy of supply and demand is going to mean that the price-per-barrel will rebound at some point, leaving only the question of who will profit when it happens.
If you’re the type of person that is seeking a residual income from your oil and gas investments, there’s no time like the present for getting started. Contact Oil for America today, and we’ll send you free information about oil and gas companies that have a proven track record of producing for their investors.
Even just the mention of the “Iran Nuclear Deal” sounds ominous, especially in the context of oil prices. While the primary thrust of these international dealings is to prevent nuclear weapons from falling into (or being created by) the wrong hands, there are naturally questions that echo throughout many different economies and industries, with the energy sector perhaps being foremost of these.
What do the negotiations surrounding the conclusion of a 2-year standoff between core nations of the U.N Security Council and the Islamic Republic of Iran mean for the oil industry? Unfortunately, the answer isn’t completely cut and dried.
The six world powers negotiating with Iran require many things of the Islamic State, the foremost of which are:
- A drastic reduction in the country’s uranium stockpile.
- Limits on how much uranium Iran can enrich, and restrictions on the degree of enrichment.
- Strong reductions and restrictions in how many centrifuges the country can run.
- Requires in-depth, third party inspections of production processes.
That’s all fine and dandy, of course, but what does all that have to do with the price of oil anywhere? As it turns out, it’s what Iran wants in return that could potentially affect pricing: Removal of heavy economic sanctions.
These sanctions have essentially cut off Iran’s economy from the outside world. And that includes Iran’s biggest export: Oil.
Furthermore, lifting sanctions will immediately give Iran access to at least $100 billion. It’s not that they haven’t been selling oil, but rather that their revenue is frozen in overseas banks. There’s no telling what such a massive cash influx will have, especially with Iran’s history of funding terror groups.
Coming to a decision that stops Iran’s nuclear program while lifting Western sanctions on the country could add anywhere from 400,000 to 800,000 barrels a day to the market, which would immediately push down oil prices. Production could ramp up very quickly once sanctions are removed, and Iran already has somewhere in the neighborhood of 40 million barrels in storage.
Even though Iran promises that nuclear weapons are not part of their long-term strategy, the international community (and Israel in particular) has reason to be wary of their ultimate goals. And many U.S member of congress believe that the deal trades away American and Israeli security. International oil pricing in the future, in large part, is directly tied to Iran’s fate.
One thing is for certain, however: Prices have been down for a while, and are reaching multi-year lows. It isn’t clear just how much downside is left, but the Iran Nuclear Deal could prove to be a catalyst that turns the market around. However, any consistent exports from Iran could take some time to begin shipping out, even with their resources in storage. By the time production begins in full, the market demand could very well have rebounded.
Furthermore, Iran has set aside almost nothing for oil investments this year, due to the drop in prices. They fully intend to restore their previous market share, once sanctions are lifted, with a goal of increasing production by a million barrels per day.
Naturally, supply and demand will eventually balance everything out over time. A greater influx of Iranian crude could potentially force an even bigger adjustment from U.S. production, which may cause a deeper contraction in U.S. national markets.
There are still many unknown variables left in play with the Iran Nuclear deal. Nobody knows exactly how things will look once the dust settles (or even if Iran will stick to its end of the deal in the long run), but the fact remains that directly investing in oil and gas is one of the best ways to quickly see a return on your oil industry investment.
Contact us today, and get information about how to invest in oil and gas at the ground level, with companies that have a proven record for producing for their investors.
It’s already November, and you’re probably beginning to think ahead to next year’s tax preparations. But, stop for a moment: If you could invest a certain sum of money this late in the year, yet still deduct nearly all of your investment as a business expense, wouldn’t you jump at the chance?
Let’s take it a step further. Imagine if that same investment could offset your other self-employed income for tax purposes. And when your investment begins to pay off, that income is only subject to the regular income tax.
Does all of that seem nearly too good to be true? Well, with the right planning and proper investment in the oil and gas well industry, it definitely isn’t.
In fact, by investing directly in oil and gas, you can realize more tax deductions than perhaps in any other investment field. It’s also important to note that you don’t have to take a loss to claim these advantages.
In addition to the aforementioned positive aspects that investing directly in oil and gas wells can bring, you’ll be able to enjoy the following tax deductions as well:
- Operational Costs
Investments like oil wells will naturally come with operational costs. For instance, if the working interest is owned by a limited partnership, and you’re investing in the role of a limited partner, you’ll probably pay for a proportional amount of the organizational costs incurred when the partnership was formed.
These costs are tax-deductible, just like with any other formed business entity.
- Intangible Drilling Costs (IDCs)
When a well is drilled, there is a certain percentage of expenses that simply have no salvage value. Whether it’s labor or fuel costs (or anything not directly related to the machinery or equipment used to drill), it’s all factored into the well’s intangible drilling costs. And these can all be fully deducted as a cost of the operation, in the year that they occur.
This is a fairly significant deduction, as IDCs can add up to between 65%-85% of your overall investment.
- Tangible Drilling Costs (TDCs)
Tangible Drilling Costs are simply costs that are directly related to your drilling equipment, and represent things like wellheads, pumping units and other similar items. Even though these particular costs must be depreciated over a seven-year period, they’re still 100% deductible.
Basically, anything physical that’s used in the completion and production of an oil or gas well can be depreciated and benefit you from a tax perspective.
Don’t wait until next year!
There will always be a reason in the back of your mind to put off your investment goals until “next year.” Don’t let those excuses stem from a simple misunderstanding of your potential tax benefits! Reach out to us today, and line up these tax advantages for your investment portfolio before 2015 is over.