Oil and Gas Investments

Oil and gas investments are generally considered safe investments, as they are commodities that will be used for a number of years in the United States. While the prices can fluctuate greatly, large amounts of money can be made in oil-gas investments if you do some research and buy or sell at the right time.

There are several ways that you can make investments with oil and gas, through company stock purchase, mutual funds that invest in the energy sector or commodities trading. You need to do research on when is a good time to buy and sell oil and gas investments. Right now, prices are down, so we are nearing the bottom, because of the state of the economy. As the economy comes back, oil and gas investments will go up in value.

There are many companies that drill for oil or gas as speculative ventures. There are also established companies that have been around for years. Some of these companies stop operations when the cost to produce outweighs the consumption and prices they can sell for. Unlike other industries, large oil-gas investments companies are very astute at monitoring cost of production and profit margins.

The mutual funds that invest in the energy sector typically invest in large and independent oil companies. They also invest in drilling, which can be more speculative in nature, but give a larger return if oil or gas is discovered.

There are two types of drilling-exploratory and developmental drilling. The first is exploring to find oil or gas, while the latter is to bring up already discovered oil and gas deposits. Typically, developmental drilling uses wells that already exist and monitor production at a profitable margin.

Oil and Gas investments can involve in investment in a company’s stock, where you receive royalties, and share in the operations of the company. Many oil and gas companies discover oil or gas deposits and develop those finds at a later time, while retaining rights or selling when profitable.

Much of the speculative nature of oil-gas investments involves drilling to find deposits that will be profitable to develop and money is sometimes spent where they are unsure as to the size of the oil or gas pocket.

Since discovering new sources of oil and gas is part of the nature of the business for the future, they can incur expenses that seem large when they are looking for new sources and initial capital requirements to develop the oil-gas investments that they locate.

With gas prices down the past few months, due to economic conditions, they are poised to start increasing in price to the consumer and investments for stockholders and commodity traders. Now may be a good time to get into oil and gas investments for the future.

Samo Janezic is a veteran Forex trader and the webmaster of Forex Third Eye [http://www.forex-third-eye.com].