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How To Invest In Oil As the year begins, investors have found themselves in a posture they didn't expect. The U.S. financial state looks like it is expanding more than most experts thought. It's hard to state whether that expansion will continue to speed up this year. But signs that the economy could be improving have increased oil prices already. That's partly because energy corporations often lead the way during expansions as more vehicles packed with products clog the highways and more people fill up their cars with gas on the way to work. But do not run out and buy giant energy company stocks, ETF's or mutual funds from the likes of Exxon Mobil Corp or Chevron Corp yet because that is only just one way of the Four possible ways to invest in oil and gas. And it traditionally will produce investors the smallest profits on your investment decision. The 4 Best ways To Invest In Crude Oil 1) Oil Well Drilling (Domestic United States) 2) Oil and Gas Royalty Interests 3) Mineral Rights 4) Stocks, Mutual Funds or ETF's Why Global Tensions Are 'Good' For Oil and Gas Investments The price of oil is notoriously tough to foresee. Earthquakes, politics, and, increasingly, speculators can impact oil prices with no warning. That said, world-wide concerns will likely send the cost of oil higher in the short term. Oil prices are already over $100 a barrel, for a gain of almost $10 over seven days. Iran's first vice-president warned that the flow of crude oil will cease from the vital Strait of Hormuz in the Gulf if international sanctions are imposed on its oil exports. This uncertainty is keeping the oil market on edge. "Anything that happens that could lead to the closure of the (shipping lane) would be extremely bullish for oil," said Peter Beutel, president of Cameron [http://twitter.com/stiffc/status/189720647642001410 <nowiki>how to invest in oil and gas futures</nowiki>] Hanover, a consulting firm that specializes in energy risk management. Recent bombings in Iraq, in the mean time, are raising worries about stability after the United States military have withdrew. "There's no reassurance that something crazy won't happen there that sends... oil up to $150 or $200 a barrel," said Mike Breard, an energy professional at Hodges Capital Management. Investors don't have to wade too deeply into commodities to capture such gains. Abraham Bailin, an ETF analyst at Morningstar, states that although ETF's can generate unwanted tax liabilities. Scott Pasinski of Domestic Development out of Dallas Texas states, Investing in domestic oil wells is the smart answer, Its actually considered real property (real estate) via laws enacted by congress and the IRS used to stimulate domestic oil production. It not only provides a secure investment environment; it also provides investors a superior 85% to 100% tax write off, along with a documented 25% to 45% returns, annually. Gas and Oil Prices Relate To The United States Economy Europe's fiscal woes could maintain a lid on oil prices. Many euro zone countries are anticipated to slide into economic downturn in 2012. And if 1 or more countries reject the European Union's single currency, the euro, the United States dollar would most likely move greater. Either could cushion the impact of oil prices for U.S. buyers. "A stronger dollar means that there will be more money in consumer's pockets," said Quincy Krosby, market strategist at Prudential. If a stronger dollar softens the impact of oil prices, organizations that concentrate on the U.S. domestic economy like retailers and auto makers ripe for out performance, she stated. Domestic oil drilling companies, which tend to be more immersed inside the U.S. domestic industry than the big cap firms, would most likely benefit most from a dollar's climb. The long Term View Of Investing In Oil and Gas As demand for oil increases and exploration becomes far more difficult, far more capital will circulate into the business of extracting crude. "We've found all the easy oil in the world," said Breard, the energy analyst at Hodges Capital Management. This is the dominant reason new technologies; such as fracking, horizontal drilling, deep drilling, 3-D/4-D seismic technologies are so vital for oil revitalization. "Oil revitalization? Yes, oil revitalization", states Scott Pasinski of Domestic Development, "this is the process of rehabbing existing income producing domestic oil wells using superior technological advances and drilling methods. By working closely with our investors, our and veteran management is able to follow a 'franchise-like' formula and uncover the 10% of opportunities that offer extremely high ROI and a secure investment in an otherwise volatile world. We successfully rehab these under-performing and mismanaged opportunities into what we call, 'Superior Investor Grade Opportunities' cause they typically produce passive returns of 30%+". Drilling and service suppliers have a propensity to gain from this shift to harder-to-get oil than large energy businesses like Exxon because of an ever-increasing dependency on deep water drilling and fracking -- a process that utilizes high pressured liquids to extract oil from deep rock formations, says David K. Randall from Reuters. Drilling companies will still to benefit from an industry-wide improvement of rigs, many assembled 30 or 40 years ago. "In almost every scenario, limited global supply growth will likely mean higher-for-longer oil prices," over the next five years, said Francisco Blanch, global investment strategist at Bank of American Merrill Lynch. "Oil is energy and we will always need energy, as well the incredible need for the 6,000+ products we use every day that are made from petroleum products, including everything made of plastics," adds Charley Havens CEO of Domestic Development. "It's a safe place to invest and returns average 25 to 45 percent, which is great for both monthly cash flow and retirement planning. We are also planning to hire about 300 people in the next few months, so when people invest in oil with a self-directed real estate IRA they are also investing in U.S. job growth."

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