Pros and Cons of Oil and Gas Investment

27 December 2018

Gas and oil are commodities that will always be in demand globally. No matter where you are in the world, people seem to be needing oil and gas more and more, be it for transportation, to run businesses and factories, and machines, and to do daily tasks such as cooking. Because of its increasing demand, it’s a highly favored investment choice by business owners and investors around the world. However, as with all other industries, the petroleum industry does have its pros and cons. Here are some of them:

Contents

1 The Pros:
2 The Cons:

The Pros:

1. There Are Tax Benefits And Advantages:

Naturally, economists and the respective governments encourage investors to put their money in the energy and petroleum industry. The more businesses in the energy sector, the higher the demand for this commodity, as the price per barrel of oil also tends to stabilize more. Remember this is important as almost all aspects of man’s daily life are highly dependent on the energy and petroleum industry.

To encourage investors to stay attracted to gas and oil businesses, governments provide for annual tax benefits and deductions. Some of these include the following:

When you invest in a limited liability partnership/gas company, such as the CEFM Oil & Gas Investment Fund, 15% of your share can become a part of your tax-sheltered income, which means that this 15% of your total stock will not be subject to taxes.
In the event of stock depletion, governments can allow for certain allowances to keep your company’s cash flow reports stable.

2. The Gas and Oil Industry Is a Lucrative Trade:

Gas and oil are both commodities. You cannot go through your daily life without either of these two. Even the simplest and most rural forms of living require gas, such as lighting up gas lamps at night. At present, the petroleum industry makes up 10% of the total gross domestic product of the world, representing an amount of around $10 trillion. This figure does not end here, as it is bound to grow even more as the global population increases in number.

3. The Rate of Return on Investment Is High:

Economists around the world found that the return on investment from oil and gas companies is usually around 5 to 10 times more than the capital that you put in. It is tough to find any other investment opportunity that allows for the same favorable returns. When exploration of an oil reserve starts, profit can begin to accumulate after the first two months; this speed is unrivaled by any other business sector.

The Cons:

1. There Is a Limit to Growth:

Oil and gas reserves are not taken from a renewable source. Eventually, the time will come when these resources will be fully depleted. As the demand for oil continually increases by the day, so does the rate of these reserves eventually being maximized and fully depleted. You can only do so much.

Further, this industry needs to fulfill a lot of environmental responsibilities, such as the rehabilitation of the reserve that was drilled up for oil explorations. Doing this entails costs for the company.

2. There Is a Huge Political Risk Involved

Because oil is a commodity, it is but natural that political governments intervene. As much as they would want to protect a private company’s interests to make sure investors in the market will stay, they are also protecting their political interests. Therefore, any change in trade factors concerning political state agreements, tax reform laws, treaties, and the like will significantly affect the price and stability of the oil. This would mean that you cannot ever shy away from any involvement of politics in your business if you decide to invest in the petroleum industry.

3. The Market Price of Oil Is Always Fluctuating:

As more and more individuals demand gas and oil, its market price will continue to fluctuate as well. Increased demand for goods will increase the supply; hence, the competition is high, so the costs have to decrease. This economic fact is good for the consumers but bad for you as the business owner. Profit is always what you have in mind, and in the oil industry, there is a ceiling as to how much you can increase the price of gas and oil.

Conclusion:

As lucrative as the oil and gas trade may be, do remember this list of its pros and cons. The disadvantages are not to discourage you from investing in this business sector, but it will help you make a better and wiser decision on where to plant your hard-earned money. Anchoring your investment in an informed decision will help you earn better growth on your commodity investment plan.

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Ariana Smith

I enjoy writing and I write quality guest posts on topics of my interest and passion. I have been doing this since my college days. My special interests are in health, fitness, food and following the latest trends in these areas. I am an editor at Content Rally.

View all posts

The Best Guide To Sizing Restaurant Booths

The furniture you use is the most critical factor when planning a restaurant layout. The design of the restaurant booths, chairs, and tables will significantly impact the number of customers you can serve. Oversized restaurant chairs will inevitably take up more space than cafe-style seating, meaning fewer customers can sit at a time. The floor plan of a restaurant has a significant impact on the success of the business. The design of your restaurant will reflect your brand, but it also affects how many customers you can serve at a time. Logically, the more space or "covers" you can save, your business will be more profitable. The restaurant owners must balance the desire to maximize capacity with the need to create a comfortable environment for customers. Maximum capacity Increasing the available space allows you to cater to more customers without overcrowding the restaurant. Regarding restaurant seating, owners and managers need more than just a choice of chairs. While most restaurants will have chairs and seating, restaurant booths are also trendy. As a means of increasing capacity, increasing customer convenience, and improving decor, booths are a cost-effective and innovative way to increase capacity. Choosing the proper configuration of restaurant booths Setting up restaurant booths will play an essential role in deciding how many seats you can establish at any time. Your booth configuration will significantly impact the number of customers you can accommodate and, thus, how much revenue you'll get. Booths in your restaurant will enable the most seats but take up the smallest space. Selecting the best design for your restaurant's booths will allow ample space for customers while maximizing seating capacity. There is no universal convention when deciding on restaurant booth configuration design. The versatility of booths enables them to be utilized to create unique floor plans and custom layouts. By setting up booth seating in unused spaces in your restaurant, you will significantly boost the number of people you serve. The diversity of layout options can allow you to suit the needs of customers of different shapes and sizes, which will result in you seeing a rise in your profits. Choose a restaurant booth design It would help if you considered whether the booth layout suits your restaurant. The structure of the booth may have an impact on your seating capacity. For instance, a booth that is 42 inches tall compared to a standard 36-inch height provides more privacy and comfort but may crowd your dining area. A curved seat cushion is often found in booth designs. It is an appealing touch to your decor and is an effective means for separating seating parts. But this can make it possible for you to extend portions of your wall bench seating area, so it's worth thinking about when planning your floor plan. Colors, fabrics, and accessories of restaurant booths Professional restaurateurs know that interior design can make or break the success of a business. The decor you choose has a substantial influence on the atmosphere of your establishment, and specific styles appeal to unique demographics. When you're finished considering which layout and designs would be ideal for your restaurant's booths, you can select the materials you'd like to use for the booths as well as the colors, fabrics, and accents. Traditional booths are usually made of wood, vinyl, and melamine, but numerous other options are possible if you need something different. You can select colors and fabrics in addition to standard shades. For example, if you want to mark your booth with your restaurant name, logo, or another custom lettering, you can create a predetermined sitting area. Standard restaurant booths have sturdy and fun textiles, making them ideal locations for relaxing. For instance, you may choose contrasting covers to go with the beautiful cushions of your restaurant booths. Plan your seating Creating a seating plan is easier to determine the sizing, position, and arrangement of restaurant booths. If you're opening a new business, reorganizing an existing establishment, or updating your decor, the time it takes to plan your seating arrangement appropriately will be well worth the effort. You can effectively use available space by developing a suitable plan for your seating arrangement. At Restaurant furniture plus, we've helped restaurant owners and managers find booths that meet their restaurants' furnishings needs. With our industry knowledge and insights gained throughout the years, we can position ourselves to help restaurant owners and managers quickly get the booths they want for their restaurants. Our selection of restaurant booths comes in numerous styles, dimensions, and configurations. No matter your restaurant's particular size, you can find ergonomically sound seating that will enhance the atmosphere and feel of your place. Likewise, our proficiency and skill can allow for the creation of one-of-a-kind custom products to your precise specifications. Additionals: The Basics of Restaurant Equipment FinancingHow Restaurant Space Landlords Can Be SuccessfulDo You Need A Restaurant Consultant to Open A Restaurant?Your Cloud Kitchen Essentials: From Licenses to Restaurant Softwares

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The Employee Retention Credit (ERC) is a tax credit that was introduced as part of the CARES Act in 2020 to help small businesses retain their employees during the COVID-19 pandemic. For wages given to qualified employees between March 13, 2020, and December 31, 2021, employers who participate in the ERC are entitled to receive a refundable tax credit of up to $5,000 per worker. The credit has since been extended and expanded under subsequent legislation, making it an important resource for small businesses that have struggled with the economic impact of the pandemic. As a small business owner, you may be wondering if you are eligible for the ERC and how to go about claiming it. This guide will walk you through the eligibility requirements, calculation, and application process for the ERC. We'll also answer some common questions about credit and provide tips for maximizing your benefit. 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Subsequent legislation has expanded eligibility to include employers that experienced a decline in gross receipts of at least 20% in any quarter of 2020 or 2021 compared to the same quarter in 2019, among other criteria. It is important for small businesses to carefully review the eligibility requirements for the ERC to determine if they qualify for the credit. This will help ensure that they can maximize their benefits and receive the financial support they need to retain their employees and stay afloat during these challenging times. ERC Calculation The ERC is calculated as a percentage of qualified wages paid to employees during the eligible period. The credit rate is 50% of qualified wages for the first half of 2021 and 70% of qualified wages for the second half of 2021. The maximum amount of qualified wages that can be taken into account for each employee is $10,000 per quarter, which means the maximum credit per employee is $5,000 for the full year. The maximum amount of the ERC is $5,000 per employee for the full year. This means that if an eligible employer pays qualified wages of $10,000 to an employee during the eligible period, they can claim a credit of $5,000 for that employee. To claim the ERC, eligible employers can reduce their federal employment tax deposits or request an advance payment from the IRS. If the credit exceeds the employer's federal employment tax liability, they can request a refund for the excess amount. It's important to note that employers cannot claim the ERC and the same wages for other relief programs like the Paycheck Protection Program (PPP). How To Apply For The ERC? To apply for the ERC, eligible employers can claim the credit on their federal employment tax returns, including Form 941 or Form 943, for the eligible quarters. They can also request an advance payment of the credit by filing Form 7200 with the IRS. Eligible employers should consult with their tax advisor or accountant to determine the best method for applying for credit. Documentation Required To support their claim for the ERC, eligible employers must maintain documentation that shows the number of employees and the number of qualified wages paid to them during the eligible period. The documentation should also show the impact of the pandemic on the business, such as government orders or significant declines in gross receipts. Deadline To Apply The deadline to apply for the ERC is generally three years from the date the federal employment tax return is filed or two years from the date the tax is paid, whichever is later. Eligible employers should file their employment tax returns and claim the ERC as soon as possible to maximize their benefits. It is important for small businesses to understand the application process for the ERC, including the documentation required and the deadline to apply. Conclusion The Employee Retention Credit (ERC) is a valuable financial relief option for eligible small businesses impacted by the COVID-19 pandemic. To successfully apply for and receive the ERC, small businesses must meet the eligibility requirements, understand how to calculate the credit, and follow the application process, including providing the necessary documentation. The ERC can provide small businesses with much-needed financial support to retain their employees and sustain their operations during these challenging times. It is important for eligible businesses to take advantage of this program and consult with their tax advisor or accountant for guidance on how to maximize their benefits. By following the guidelines outlined in this guide on how to apply for and get the Employee Retention Credit (ERC) for small businesses, eligible employers can receive the necessary financial support to navigate the pandemic and emerge stronger in the future. 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But, the reality is they cannot gain more unless they spend more time, money, and energy on building their ideas in a specific direction. Steps To Become A Successful Entrepreneur You have to follow specific steps on your end while you want to become a successful entrepreneur. However, it can make things work well in your favor while you want to achieve your aim appropriately. 1. Choose The Right Business Idea: Pick What Excites You You must select the right business in just about a specific area. But, first, you have to pick the field of the work where you want to start your business. It will allow you to explore new things and become an expert at them. Ensure that you must not make your selection in the erroneous direction while you want to become a passionate and successful businessman. 2. Plan And Streamline: Knowledge Is Power To become an entrepreneur, you do not need any kind of formal education or, better to say, fancy degrees in your name. How to become an entrepreneur? 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Let's assume you have become, but what if it doesn't work out? What if you lose interest? There could be a thousand reasons why your business doesn't work out. In that case, you must have another plan as your backup and even a contingency plan to help you escape in case of a business failure. At the same time, is just one backup plan safe? If you are neurotic like us, you will probably have more than just one safety net plan. In case you don't have a plan, make one today. For everyone who does not like making too many plans, you will just have to be more accepting of the idea of making plans in case you do end up wanting to become an entrepreneur. My Rags To Riches Story: A Mediocre Man's Guide To Entrepreneurship Yes, I am that mediocre man who was a writer and then one day took the first step in his entrepreneurial journey. So how to become an entrepreneur who's young, successful, and cannot 'affrord' to start any business. Here's how - simply scroll down to find out! 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First, however, you need to focus on things in the right way to achieve your goals correctly. Stop Reading, Start Playing: The Market Is Ready To Welcome You Hence, these are some of the core facts you can take care of while you want to develop your career as an entrepreneur. You must not make your selection and the choices in the wrong way while you want to implement your business plans. You can share your views, opinions, feelings, and ideas to get things done in your favor. Proper implementation of the strategies can help you to achieve your aims effectively. You need to know how to help you appropriately shape your career. I must say here that entrepreneurship is not a myth but rather a truth that has become a driving force for this young generation to achieve their goals in life. Don't forget to let us know your thoughts on the same in the comments section below. 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Pros and Cons of Oil and Gas Investment

The Pros:

1. There Are Tax Benefits And Advantages:

2. The Gas and Oil Industry Is a Lucrative Trade:

3. The Rate of Return on Investment Is High:

The Cons:

1. There Is a Limit to Growth:

2. There Is a Huge Political Risk Involved

3. The Market Price of Oil Is Always Fluctuating:

Conclusion:

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How to Retain Your Top Employees While Growing Your Business

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Ariana Smith

I enjoy writing and I write quality guest posts on topics of my interest and passion. I have been doing this since my college days. My special interests are in health, fitness, food and following the latest trends in these areas. I am an editor at Content Rally.

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The Best Guide To Sizing Restaurant Booths

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How To Become An Entrepreneur? A Brief Guide Of 2022

Pros and Cons of Oil and Gas Investment

The Pros:

1. There Are Tax Benefits And Advantages:

2. The Gas and Oil Industry Is a Lucrative Trade:

3. The Rate of Return on Investment Is High:

The Cons:

1. There Is a Limit to Growth:

2. There Is a Huge Political Risk Involved

3. The Market Price of Oil Is Always Fluctuating:

Conclusion:

Share this Article

Ways to Get Dry Cleaning Services at a Low Price

How to Retain Your Top Employees While Growing Your Business

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I enjoy writing and I write quality guest posts on topics of my interest and passion. I have been doing this since my college days. My special interests are in health, fitness, food and following the latest trends in these areas. I am an editor at Content Rally.

Leave a Reply Cancel reply

Popular

Follow Us

Recent

Related