Part II of Americana: Oil and Gas Investments are Unique in the U.S.
As discussed in Part I, U.S. citizens have access to some of the most easily accessible oil and gas investment opportunities available to private entities throughout the world. Domestic oil and natural gas drilling provides a politically stable and technology rich exploration environment. Although much of the easy-to-find oil has already been extracted, innovations in exploration and production are “allowing economic access to domestic resources that are concentrated in deeper formations, tighter zones, deeper water, more sensitive environments, and increasingly more unconventional settings”(U.S. Dept. of Energy Report: Environmental Benefits of Advanced Oil and Gas Exploration and Production Technology).
In other words, easy oil may be behind us, but technology has made previously inaccessible oil available in vast quantities. Investment activity in the oil and gas sector is thriving as new reports are released indicating that domestic reserves are much higher than previously thought. According to the DOE report, “As E&P capabilities continue to grow, so does the consensus of estimates of recoverable U. S. oil and gas resources. For example, in the 1970s, the consensus of estimates of ultimately recoverable gas resources was on the order of 400 trillion cubic feet (Tcf). Today, adjusting for what has already been produced, estimates range from 1,200 to over 2,000 Tcf.”
The good news doesn’t stop there. Thanks to Congress, oil and gas investments offer some of the best tax advantages available. Generally speaking, investors are often able to write off 70 – 85% of their investment against taxable income during the first year. For an in depth look at available tax advantages, visit our section dedicated to the tax advantages of oil and gas drilling.
As Americans, we often don’t realize how privileged we really are. We have access to investment vehicles that are closed to many parts of the world. Political stability provides a hedge against disruptions due to civil uprisings and the tactical shifts of foreign governments. Technology is expanding the definition of “recoverable reserves,” bringing a new wave of possibilities. Congress has provided generous tax benefits to support much-needed domestic drilling activity. In short, if you’re not already asking yourself how you can benefit from the unique circumstances that surround you, perhaps it’s time to start.
Published Thursday, July 12th, 2007 at 6:30 am and filed under Articles.