The ever-increasing energy demand of oil and gas makes investment in the energy sector a lucrative investment option for those looking for a high yield investment avenue. However, unlike any other investment option, there are certain risks associated with investing in oil and gas industry, too. It, therefore, becomes important for an investor to evaluate the pros and cons of investing in the oil and gas industry before one decides to invest in it. To help you make an informed decision, in this post we list some of the pros and cons of investing and in the energy sector. Let’s take a look.
Pros
Lucrative Investment Option
Around 10 percent of the world’s aggregated GDP (approximately $10 trillion) is what current global economies consume in oil and gas. Considering the fact that the global population is only expected to grow from here, the consumption of this usable, and lucrative, form of energy is also expected to grow at a fast pace, making oil and gas investments a lucrative investment option.
Huge Returns
In the last 15 years, the Energy Select SPDR ETF that invests in oil and gas companies, gave 200 percent more return than Dow Jones Industrial. The demand for oil and gas is expected to go up in the near future, which in turn will lead to increase in the prices as supply is constantly diminishing thereby increasing the potential return on investments for investors.
Tax Benefits
One of the biggest concerns for investors is the tax that they have to pay on their returns and regular income. Investing in oil and gas allows investors to realize substantial potential gains on their investments with an added incentive from the US government, in order to encourage investments in energy sector, offering several tax benefits. If you invest through us at Fig Tree Ventures Capital, our experts can help you save up to 90 percent in taxes paid to the government in the first year.
Also Read:- All You Need to Know about Oil and Gas Investment Tax Benefits
Cons
Political Intervention
The geopolitical factors have a major role in influencing oil and gas prices around the globe. Some of these volatilities may be attributed to the change in currency valuations, trade policies, governments, and tax reforms in the countries where these companies are operating. One of the ways investment firms mitigate the political risk is that they purchase political risk insurance.
Price Fluctuations
Operational costs can have a major impact on the costs of a project. The operational costs depend on several factors such as the difficulty of drilling, cost of employing and retaining qualified workers, any unforeseen issues or concerns during the fracking or drilling process. One of the ways to mitigate the risks is to diversify the investment portfolio by investing in multiple projects that allow investors to hedge against the fluctuations in operational costs.
Missing Out on America’s Energy Investment Opportunity? If you aren’t already invested in the increasingly profitable Oil and Gas industry, or are still confused about investing in it, our team of industry professionals at Fig Tree Capital Ventures can help you identify, evaluate and invest in the best direct investment opportunities in the Energy sector. To learn how we can help you invest in Texas and Oklahoma oil and gas projects, fill out our contact form or call us at (866) 300-2170
