Investments In Oil and Gas

Investments in oil and gasWhy Is Investments in Oil and Gas An Alternative Investment?

Investments in oil and gas offer an alternative investment strategy for sophisticated investors who seek to grow and protect wealth, hedge against inflation, contribute to the economy, significantly reduce their tax burden, diversify their portfolios, or be a part of the innovative solutions that will restore the American economy and improve employment.

The real question is why would a qualified investor not consider investments in oil and gas. Investors who choose to invest in oil or dedicate a portion of their wealth to investing in oil wells are positioning themselves not only in a manner that will create short-term and long-term wealth in today’s market but also to be ready to capitalize on the inevitable spike in prices that will occur once Peak Oil is reached. Only through investments in oil and gas can the serious investor be fully prepared for the impending energy crisis.

The volatility that exists in the current financial and real estate investing markets make investments in oil and gas more attractive to investors who grow tired of the unpredictable vulnerability of the markets to everything from international conflict and crisis to weather. Oil and gas investments typically respond to these crises differently than financial and real estate markets, providing investors with the balance required for protecting wealth. Investments in oil and gas can provide a shield against market volatility while offering the investor additional methods for building and preserving wealth.

Investment in oil and gas carries with it a certain degree of risk, and understanding how to invest in oil wells is crucial to the potential success of the investor. Many types of investments in oil and gas are limited to certain investors who can meet specific financial requirements, including minimum annual salary and/or asset requirements. For those accredited investors who meet the financial requirements, investment in oil can provide a way for the investor to do more than diversify his or her portfolio but also to contribute to the strength and stability of the United States.

Not only do investments in oil and gas allow the United States to increase its own domestic energy supplies, thereby reducing reliance on the sometimes unstable foreign countries currently helping to meet the growing energy need in this country, but it also helps to stimulate the economy by creating jobs in an industry that has a ripple effect that impacts satellite industries in retail, manufacturing, and services.

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Accredited investors who choose to invest in oil wells, particularly those who choose partnership or joint venture arrangements with oil and gas investment companies, can use their investments in oil and gas to offset income from a variety of sources due to the generous tax benefits available to the investor. These tax benefits include tax reductions allowable for nearly every cost incurred during the exploration for, establishment of, and production from each well that is drilled. Intangible Drilling Costs (IDCs) are 100% deductible and include most costs associated with drilling besides the drilling equipment. Tangible Drilling Costs (TDCs) are relevant to the actual drilling equipment and are also fully depreciate over seven years. Lease costs are also 100% tax deductible.

In addition to deductions and depreciation, investment tax credits were developed to provide incentives to investments in oil and gas. Investors who make investments in oil and gas can claim up to 15% of the costs from enhancing well production. As well, 15% of the gross income earned investments in oil and gas is earned tax free in most cases. Investments in oil and gas offer investors a wide variety of opportunities to preserve and grow wealth while contributing positively to the U.S. economy.