The Benefits of Direct Oil and Gas Investing Strategies
Oil & gas investing is gaining popularity. While domestic oil production lost steam in the latter part of the 20th century, the 21st century has introduced new techniques that make oil and natural gas exploration more efficient and cost effective. And there are many additional benefits to a Texas oil investment.
Domestic Oil Production
Our dependence on foreign oil is at a frightening stage. With the unsavory Middle East developments, the U.S. should find new ways of extracting domestic natural resources, including oil and natural gas. With more oil production in the U.S. we can increase our own oil reserves and gain a new sense of national pride in oil independence.
Tax Advantages
Direct oil & gas investing can create attractive tax advantages. Congress has passed tax incentives for domestic natural gas and oil production which include a full 100% deduction of “intangible drilling costs” (IDC) like labor, chemicals, mud, etc., in the first year of an oil venture. The additional “tangible” costs can be deducted over a 7-year period. Other tax incentives include possible alternative minimum tax and deducting lease costs as well.
Monthly Cash Flow
Texas oil investment can result in a regular cash flow once production in full swing. Direct oil & natural gas investing can provide a monthly income resulting from all resources sold during the month. Additionally, cash flow can be considerable in the first few months of production when much of an oil & natural gas reservoir is tapped.
Hedge Against Inflation
Oil & gas investing can also work in favor of the investor against inflation. Oil & natural gas is less dependent on interest rates compared to other traditional investments such as stocks, bonds, and real estate. Thus, oil & gas investing provides a hedge against an economic slump and inflation.
A Texas oil investment comes with many benefits. And while not all oil & natural gas investing is the same, an investor should look carefully at the approaches of an oil company, perform research, and learn to become a disciplined investor.
Author Bio: Steven is the President of CBO Energy, Texas Premier Oil & Gas Investment Frim.
