Interesting Considerations for Oil and Energy Investing


The mining and oil sectors were the best performers in the stock market overall during 2016. Prices for oil were down, but the industry held its own heading into 2017. It is interesting to note that many of those gains came from MLP companies. MLP stands for Master Limited Partnership, which refers to companies that are involved in oil and energy, but do not own any commodities. Theses are companies that deal with the extraction, refining, transporting, and storing of oil, natural gas, solar and wind energy, and coal. The investment risks are lower than companies that own commodities, and they still have the potential for modest to high gains.

Investors can place money into energy without exceeding personal comfort levels for risk. Another benefit of this type of investing is that stocks are not as volatile as commodity stocks because profits are not determined by the rise and fall of pricing. Regardless of the cost of a barrel of oil, it still has to be stored and transported so those companies remain healthy and profitable. There are also tax incentives for investing in MLPs. Investors are legally able to keep between eighty and ninety percent of earnings without paying taxes on them. A loophole regarding limited partnerships provides a tax shelter for long-term holdings. The benefits of investing in MLPs in the oil and energy industry are outlined online. Those interested in the opportunities can view it now and learn how to get started. There are three companies listed specifically, with data to substantiate potential gain claims.

Another interesting consideration for investing in energy is to find small startup companies with new ideas regarding ways to make solar and wind energy components smaller and easier to use on a residential scale. There are companies that have developed solar energy collection techniques that work well in under developed countries. They are simple, cost-effective, and accessible to poor countries and struggling governments. Investing in an innovative company before it makes major breakthroughs in the industry can lead to significant financial gains. Whether investors are seeking low or high risks, there are plenty of opportunities in oil and energy.