Supply and Demandĭespite the surge in biofuels and renewable energy sources, the majority of the transportation infrastructure in the U.S. This is not the case for oil, because there is no alternative to many of the products produced from petroleum. For example, if apple crops fail one year and the price of apple juice goes up, people can instead purchase orange juice, soda, or milk. It is important to note that most goods in our economy have substitutes. In fact, many of the items in and around your home could contain a by-product of oil and gas. Most plastics are also made of petroleum. Whether it is gasoline for your car, propane for your grill, or a football you are tossing around with friends, these are all products made from petroleum. The gasoline for your car is NOT the only product made from petroleum.
Though you may not realize it, there are petroleum-based products all around you. Petroleum Is Used In More Items Than You’d Think
There are several reasons why petroleum is in high supply in America and globally. Petroleum - also known as crude oil - is what is extracted from the earth and is then refined into gasoline, gas and other types of products. What Is Petroleum?Īny investment begins with understanding exactly what you’re actually investing in.
#Real options valuation in oil and gas how to#
Read further to do just that by learning the basics of investing in oil and gas, the advantages and disadvantages, and how to take the next step if you want to become an oil and gas investor. What’s the best way to minimize risk and maximize returns? Financial education. Regardless of how you invest in oil and as, it can have tremendous financial upside (and your investments can even be 75% to 100% tax-deductible), but carries an equal amount of risk. While that is one way to invest in oil and gas, there are certainly other ways to become an oil and gas investor that you may not even know exist. Investing in oil and gas may conjure images of standing under the heat of a Texas sun, watching cranes extract oil from the earth and hoping that the reservoir - and the money they’re making - never runs dry.
Pros and Cons of Investing in Oil and Gas.
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