crude oil

Due Diligence on Oil Investing

If you are considering investing in oil but haven’t decided whether or not it’s the right thing to do, think about the guy who has to commute to work every day.
As the gas gauge on his vehicle leans towards empty, the driver reluctantly steer towards a gas station, bracing himself as he relinquishes his precious earnings for continually increasing prices. He really doesn’t have a choice, does he? Gas might be expensive, but it would be even more costly to stop going to work. That’s just one of the reasons why investing in oil has become such a lucrative proposition.

The demand for oil for heating homes, fuel for cars, and the oil used in manufacturing the goods consumers need to survive has created an unprecedented demand for a commodity whose supply is dwindling. Investing in oil offers you the potential of becoming a part of a unique market with potentially volatile prices.

There are numerous strategies for investing in oil available to every type of investor. Those simply looking to expand their investment portfolios without investing in crude oil itself could consider investing in an ETF. Many investors investing in oil consider stocks and bonds for preliminary investment opportunities. Commodities are another form of oil investment in which investors are dealing directly with crude oil and can utilize futures contracts to trade on the market along with investing at the wellhead directly Investing in oil offers serious potential for the qualified investor.

Investing in oil is a sophisticated investing opportunity that requires due diligence and a willingness to assume some risk. Only highly qualified, accredited investors are eligible for investing in oil because of the inherent risk in doing so, but the advantages and benefits offered by investing in oil are significant.

Not only can investing in oil offer investors the ability to hedge against future price increases and diversify an investment portfolio, but it can also provide significant tax benefits for the accredited investor.

Accredited investors are serious investors who possess a net worth of at least $1,000,000 or an annual income of at least $200,000. While that is the general stipulation, there are other options in which an investor can become accredited, alone or with a spouse. Direct Participation Programs can be one of the most profitable forms of investing in oil because investors can access the significant tax benefits associated with oil drilling along with potentially high profits.