The year between 2014-15 saw significant changes in production and consumption patterns in the oil and gas industry. For the past several years, the United States has enjoyed a period of shale boom: more oil and gas than they can drill; lower gas price at the pump and numerous employment opportunities in the energy sector. Needless to say, the shale boom revolutionized the way we see our own domestic energy sources. Suddenly, the country has realized that it can fuel its own energy needs without depending too much on other countries; a far cry from the many decades that the country had to rely on oil imports for the majority of its energy source.
For the consumers, lower oil and gas prices means more savings from their heating and transportation needs. For businesses depending on oil and gas, this means lesser overhead expenses and also more money to save that they can potentially put elsewhere. But what does this mean for the investors?
Surge in US Oil Production
The investors are in very volatile position, especially in the United States. The world is oversupplied with oil yet we are producing more oil than we can consume. We are producing more oil, but we are also losing employees because the technology used is very costly and the industry is not making as much profit than it is expected to. This year may be challenging but the investors are not completely defenseless if you follow these smart oil investment strategies.
Tips for Smart Oil Investment Strategies
- Focus on improving efficiency: Whether you’re a huge oil company or a small-time oil drilling operator, you need to make each dollar and each barrel count. The technology for generating oil is already expensive as it is, but improving the efficiency of the process will make the venture worthwhile. New technologies at the refineries and introduction of more efficient methods will help ensure that even with lesser investments, it is still possible to squeeze huge volumes.
- Determine if the investment portfolio is still providing you with optimum returns: It is easy to believe that having various direct oil well investments will help improve your chances of ROI. That is true. But with the current turn of events, you portfolio may need careful evaluation. Each well and field must be strong and efficient enough to meet the demands as well as challenges in the oil market.
- Solidify and build new relationships: As an investor, you cannot be confined within the box. Thinking beyond where your investment can go. Can you reach out to new customers and strengthen the relationship with your existing customers? Is it possible to enter smaller niche markets in order to avoid clashing with strong rivals that can kill your investments?
With the oil market being volatile as it is, investors can no longer afford to sit back and expect to watch their ROIs grow, they have to attack the market with smart oil investment strategies to bolster their portfolios and return. It is best that investors acknowledge and adjust with the current reality and make wiser decisions based on up-to-date information. With money and investment on the line, investors need to be more radical and open with their options yet tread with their decisions carefully.