Tax Benefits of Investing In Base Oil and Gas

Investing in various commodities is all about the various benefits you want to gain from the same investment. Although, for sure there are indeed a few risks involved, but those can be easily neglected as the return and the benefits are enormous.

When you decide to invest in any commodity like base oil commodity or the natural gas, you also need to know that there are various benefits in the same. One of the best benefits you can get is the tax benefits out of these investments. Here are those –

1.      The cost reduction of the tangible cost – There are a few costs involved in the oil and gas investments and one of these are the tangible costs related to drilling. These costs include the equipment costs used for drilling, and the best thing is, the investors enjoy up to 100% deduction of these costs.

2.      The cost reduction of the intangible cost – The intangible expenditures of drilling such as the labor, chemicals, mud, grease, etc. are usually about 65% to 80% of the cost of a well. These expenditures are considered “Intangible Drilling Cost (IDC)”, which is 100% deductible during the first year. This is indeed a great tax benefit for the investors.

3.      The various income sources – When you are investing in the oil and gas commodity, there are various passive and active incomes that you can enjoy as an investor. The Tax Reform Act of 1986 introduced into the Tax Code the concepts of “Passive” income and “Active” income. The Act prohibits the offsetting of losses from Passive activities against income from Active businesses. The Tax Code specifically states that a Working Interest in an oil and gas well is not a “Passive” Activity; therefore, deductions can be offset against income from active stock trades, business income, salaries, etc. 

4.      The tax exemption benefit – If you are a small scale producer or an investor in the oil and gas commodity, then you can enjoy the benefit of tax exemption. This benefit is known as the “Percentage Depletion Allowance”, which is specifically intended to encourage participation in oil and gas drilling.  If you are a large producer or an investor who produce more than 50,000 barrels per day, then this benefit cannot be enjoyed by you. The “Small Producers Exemption” allows 15% of the Gross Income (not Net Income) from an oil and gas producing property to be tax-free.

Things to Consider Before Investing In the Commodity Market

Investing in the commodity market involves a lot of risks and there are many things to consider before making any investment. Because – your money is on stake and nobody likes to lose money. As a commodity investor, you don’t have to buy 100s of units of commodities and find out the faults in them. For example you don’t want to discover the corn you’ve purchased is of poor quality or the cattle you have bought are deceased and of no use. This is why you need to take a few things into consideration before you invest in the commodity market.
There are many options for commodities – Dominican commodities, Asian commodities and so on. You must make sure that before you are investing in any of these, you are well aware of the things below –

1. It is a risky affair – Commodity investment is a risky business. These risks are quite unpredictable and can happen anytime for example – the weather pattern, world conflict, natural disaster, epidemics and so on. For instance, if you are investing in the oil or gas commodities, your investment and profit for the same can be affected by world conflicts. Investing in the corn or grains commodities can be affected by natural disaster or weather pattern and so on.
2. Know in and out about your commodities – If you are investing in a particular commodity and you don’t have proper knowledge for the same, it can affect your investment. Whether you are investing in commodity futures or in oil or natural gas and such, you must know whether that particular commodity will provide you better returns or not. For example, investing in gold or platinum is a better option because these commodities are always in demand.
3. Stay informed – Just investing and putting your money doesn’t end the job. The process is a lengthy one and you must know each and every happening in the commodity market. A good investor is always well-informed and well-aware of what is going around in the market. If you want to be a gainer, learn the technique of being a lurker.
4. Know the basic Principles of economy – You must know the basic economy principles involved with the commodity market. Lower supply equals higher prices. To find out any major disruptions in supply such as diseases and health scares, follow livestock patterns and statistics. Read the latest headlines and analysis of the commodity market. Know what you’re dealing with.

Why To Invest in Coal Commodity?

 

Coal is an abundant sedimentary rock and fossil fuel used primarily as an energy source for electricity and other industrial uses such as smelting and alloy production. Coal is seldom confused with charcoal, which is primarily of wooden origin.
 

Coal was previously used as mere household heating commodities but when the industrial revolution began, coal mining started to became large-scale. It then became an important commodity to produce electricity as well as to provide primary energy for industries as well as transportation during the 18th century to the 1950s.
 

Rather than gas and oil, coal is still regarded as one of the most affordable fuels for power generation across the world. There are many reasons why coal prices are increasing and will continue to increase, but the simplest answer is the basic principles of supply and demand of coal. High price of coal in recent months is due to the rise in the levels of demand from industrial giants such as China and the US.
 

In addition to the initial and the current coal prices, it is also important to seek professional opinions on the coal commodity trading. Because we cannot know everything about the market and we need guidance to help better our performances.
 

Professional and experts gives new ideas and can help one understand a number of things to help increase on the level of sales. One can even invest in coal online, nowadays. Investors can now buy, sell and virtually trade in coal commodity just like any other stock or equities.
 

Stocks or equities have been a driving factor for many to invest in coal because investing online reduces the risk of actually owning the metal. Investment in Coal is a great portfolio diversifier which can reduce the overall risk (volatility) of your portfolio.


 

Crude Oil Commodities - Why You Should Consider Investing

 

Though most of commodities like metals have been used for many industrial applications but the usefulness of crude-oil as it is the most important energy sources in the world. Crude-oil has been the most valuable commodity that has been drilled out from earth and which has readily changed the lifestyle of human beings.
 

In today's era anything we use for our daily purpose is indirectly linked to this precious commodity crude oil. In today's world the countries of Saudi Arabia, Russia are the largest producers of this precious crude oil followed by United States of America.
 

It can be said that it is made up of a hydrocarbon mixture if we go deep into the chemistry of the crude-oil. It is found as a liquid in its natural form and found within the formations of earth’s cleft due to the decomposition of the dead organic matter millions of years ago. Once this oil is distilled then a variety of lubricants and petrochemicals are obtained from them.
 

Kerosene, Diesel, Fuel oil is the main products that are obtained by the distillation of the crude-oil. The crude-oil that is drilled from the different locations of the earth is found to vary much in their viscosity density and composition.
 

The best quality oil till now has been concentrated in the Gulf countries and hence they have a high demand for their high quality oil. The most common uses of crude oil is that it can be put to use in the form of gasoline which is the fuel for the aircraft, automobiles, heating oil’s and also for the generation of the electricity.
 

Some experts are predicting that the prices of crude oil will rise in future because of its various uses. Therefore it is the time to consider adding crude oil commodity to your investment portfolio.
 

Five Ways to Save Money on Gasoline

 

Gasoline is a mixture of liquid hydrocarbons that are derived from petroleum which is highly flammables and this is one of the main products made from the processing of crude oil. It is used as a fuel for combustion engines fitted in automobiles, motorcycles, and small trucks.
 

The price of gasoline has increased more than 90 percent in the last few years. Due to rising prices of gasoline more people are riding through buses and selling their vehicles in exchange for hybrids and fuel-efficient cars to save their money.
 

But to save money on gasoline, it doesn't mean to sell your vehicles or leave your vehicles at home and take public transports, or to drive less often. One of the smarter ways to save money on gasoline is to maximize you consumption on gas.
 

Below are some of the money saving tips on gasoline consumption
 

Maintaining your car in good condition 

Regularly servicing of your car can ensure a better mileage and hence less gas refilling. As such, you can save money on gasoline.
 

Ensure clean air filters
If you want to save more gasoline then you should change congested and dirty filter. Changing or cleaning air filter can increase your car’s fuel efficiency and prolong its engine life.
 

Regularly check on you tyres
If the tyres are not inflated properly, your car would actually use more gasoline. Hence it is always wise to 

 keep you tyres well inflated so that you can save money.
 

Reduce any unused items in your car
Reduce items from your vehicle which you don’t not need. By doing this your car can actually save more gasoline as it will need less energy to move.
 

These money saving tips, if applied, can save you quite a lot on the expenses on gasoline.
 

Investing in Gasoline commodity can be seen as a great hedge against the current downturn in the world’s equity markets. As it is one of the important commodities as it easily transportable/handled unlike pressurized gaseous fuels. If you want to find out more information about how to invest in gasoline commodity just visit JB Commodity.

 

Coal-The Largest Source of Energy

Coal is one of the most extensively used non-renewable sources of energy in the entire world. It retains the  credit of being known as the precious resource material since ancient times and in true terms acts as a valuable asset to its manufacturers and suppliers.

It still remains one of the most popular means of extracting energy in the world. Coal is related with every industry either as a key integral part of manufacturing, processing, transportation or as raw material. Whether you live in the United States, Dominican Republic or any other part of the world, coal is most likely used to heat up your house during winter.

 Coal power is one of the first types of power sources uses to create electricity and other forms of energy. In today's society coal is utilized for energy by combustion or burning. About 65% of the world's coal is used to provide electricity.

Unfortunately there are many environment disadvantages to using coal power. Coal releases the greenhouse gases like carbon dioxide and methane which are the big and main causes of global warming. This global warming involves greenhouse effect process by which radioactive energy leaving a planetary surface is absorbed by greenhouse gases thus warming the earth's surface. (When coal is burned, it produces sulfur dioxide and nitrogen oxide, which produces acid rain and smog).

It is true to say and there is no doubt for it that the coal usage leads to pollution in former years. But now a day’s newer coal mining companies are taking steps to assure the environmental aspects and providing better working environment and benefits package for their workers. As oil prices rise, it usually causes other commodities such as coal and natural gas to rise as well, generally at a lesser rate than oil.

Crude Oil And Gas Commodity - JB Company

JB commodity include a number of different commodity services such as natural gas and various grades of crude oil commodities. JB commodity real-time data flow environment provides professional service and timely market information like advisory, risk management, or trading services.