Rising Oil Prices: Is Now the Time to Invest in Oil?

[Posted on October 30th, 2013 by Michael L. F. Slavin]

Many investors are aware that the prices of oil and gas cycle up and down on a daily basis. The seeming uncertainty of oil and gas prices may make investors hesitant to invest in these commodities, but there are several reasons that indicate now is the right time to invest in oil with U.S. Emerald Energy.

The Fluctuating Prices of Commodities

Oil and gas are considered to be commodities. One broad definition of a commodity is a material that is not differentiated by brand from other similar materials. Petroleum is petroleum regardless from where it is pumped out of the ground or which company extracts it, just as one farmer’s wheat is basically the same as another farmer’s wheat. As a commodity, the price of petroleum is subject to fluctuations, and these peaks and dips can make those who invest in oil nervous. This is especially true of first-time investors who are not familiar with why the prices of commodities rise and fall. The prices of all commodities fluctuate based on currently available supplies, changes in demand, geopolitical dynamics and other economic factors.

Oil prices tend to rise during times of increased economic activity, which creates an increase in demand, and drop during times of recession as demand decreases. Announcement of the discovery of a new oil reserve may also trigger a short-term drop in petroleum prices. Sometimes the causes behind a temporary spike or drop in the price of a commodity cannot be explained. Despite daily rises and falls in price, the long-term trend in petroleum prices has been upward over the past several decades. Many economists believe that as the worldwide supply of oil decreases due to ongoing consumption, prices will continue to rise over time. This potential increase in the future prices of oil and gas makes now a great time to invest in a production well with U.S. Emerald Energy.

Investing In Oil and Gas Wells

U.S. Emerald Energy offers a distinct type of investment in oil and gas wells through a direct partnership agreement with investors. When investing in an oil or gas well, the investor contributes the funds needed to drill and complete the well. The costs associated with drilling and completing a well generally include mobilization and demobilization of drilling equipment, labor costs, drilling mud and well casings, as well as other related expenses. All of these expenses are deductible on the investor’s federal tax return either through depreciation or direct deduction. U.S. Emerald Energy’s contribution to the partnership includes the expertise needed to locate, drill and develop the well. In return for providing the financial backing, the investor will receive a monthly dividend check from U.S. Emerald Energy. The amount of the check may vary from month to month and is dependent on the quantity of petroleum or gas pumped from the well and current market prices. Fifteen percent of the monthly dividends are free from federal taxation. Unfortunately, not every well project is successful, but the upfront investment remains tax-deductible even if the well does not strike oil or gas. 

Although no investment is guaranteed and some drilling projects fail to strike a productive oil or gas reserve, the combination of tax breaks, long-term income and potentially rising prices for oil and gas make investing in oil and gas wells an excellent choice for many individuals. If you haven’t yet included oil and gas well investing in your portfolio, contact U.S. Emerald Energy for more information today.

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