Because oil is widely used around the world, energy investors often look to oil rigs when seeking high payouts for their investments. Investing in oil rigs is a particularly effective way to make a fossil fuel investment. Here are some ways that such an investment may prove profitable to you.
There are tax benefits from investing in oil rigs. Most investments are made with post-tax dollars, meaning that your dollar’s growth potential is immediately diminished. Because of benefits in the federal tax code, many who invest in the oil industry can do so with pre-tax dollars. This provides a tangible benefit to oil investors, even before the rig has a chance to strike a big reserve.
Modern drilling techniques have an increased likelihood of success. Investors in the oil and gas industry realize large payoffs when rigs find huge pockets of oil. Drilling companies can use new techniques to improve their chances of hitting a big reserve. Even better, rigs that drill near known pools of oil can greatly increase the odds of a big payoff.
The costs of rigs are easy to ascertain. Unlike some investments where costs skyrocket after the initial investment, the expense of drilling with an oil rig are knowable. Often those investing in oil rigs see no cost increases after their primary payment. If costs do rise, oil companies general can anticipate and control rig costs.
Oil rigs can last a long time. Investing in production that can be sustainable for the foreseeable future is a good way to make money. Oil rigs are sturdy and low-maintenance. Because of this, an initial investment of capital can sustain a rig for years.
Investing in the oil industry is popular because of the potential for high-yield payoffs for investors. Given the cost containment for these investments, it is not hard to see why so many consider investing in oil rigs.