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There are many financial products you can invest in, from traditional stocks to relatively nascent index funds. But the oil industry is one of the few financial markets that offer unique benefits to its participants. Below are some reasons why you should be allocating a portion of your investment capital into the oil industry.

Consistent Returns On Investment

Nowadays, quality investments are drying up. The number of investors keep increasing, but the opportunities for profit are scarce. When it comes to oil and gas, however, the returns on investment have been consistently high. Many oil and gas investments have seen a 100 percent return within a 5-year time frame. Even if you choose to sell off half your positions to lock in profit, you will still have the initial amount invested and making money.

Intangible Drilling Expenses

If you are planning on investing in actual oil companies instead of artificial derivatives, you are given the benefit of intangible expenses on everything except for the actual drilling equipment. Labor, dirt, grease, and chemicals are treated as intangible expenses and generally comprise around 70 percent of total drilling costs. They are completely tax deductible within that year incurred. For instance, if drilling a well costs $250,000, and 75 percent of the cost was ruled out to be intangible expenses, the investor can receive a deduction of $187,500.

Variety Of Investment Options

There is a wide range of investment avenues accessible for oil and gas investors. These can be divided into 4 major categories - partnerships, mutual funds, royalty interests, and working interests. Each avenue offers a different risk profile, tax regulations, and legal conditions. Before tapping into any oil or gas investment, make sure you understand these differentiating qualities.

State Of The Art Technology

Oil companies, such as Fusion Resources LLC, employ cutting edge technology to produce domestic oil and natural gas from carefully chosen drilling areas. Taking advantage of this available technology enables oil and gas companies to generate steady returns for their investors while minimizing risk. Many of these oil and gas reserves are managed by world-class groups of experienced geologists and petroleum engineers.

From a taxation angle, oil and gas investments look like real winners. Of course, they are not suitable for all investors. Like any other investment product out there, oil and gas present risks that should first be identified and accepted. Blindly investing in the oil industry can lead to serious financial losses.

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