With oil prices starting to drop again, many investors are thinking that they should consider making an investment in a gas and oil company. Since everyone knows that the gas and oil industry will rebound, even if it takes a couple of years, investing is a wise decision. Buying when prices are low is the hallmark of good and smart investing, but it’s important to look at the big picture and to get a better idea of just why investing now could be a good decision, and why there is still some risk with certain investments.
Why Do the Prices Drop?
When the supply outweighs the demand, the prices of any goods will drop. This is what’s happening with oil right now. It’s currently around $55 a barrel, which is the lowest it’s been in years. OPEC, the United States, and other countries are still adamant that they will not slow production too much, and this is one of the reasons that the prices are as low as they are right now. While this might be good for those who head to the gas station, as well as those who want to invest, it’s wreaking havoc on many oil companies.
What about the risks? While coming back from the low prices is a given for large companies, some of the smaller businesses might not fare as well. That’s especially true if the price per barrel dips much below $60. So, investing in a smaller company has greater risks, even though the price to invest might be lower. There’s always a chance, slim as it might be, that the company will go under and have no chance of recovering. This means investors have the potential to lose their investment.
When Will They Rebound?
While it’s impossible to tell for certain, most feel that it will take at least a couple of years before the prices rebound. If there are no changes to the drilling practices and there’s no slowdown, it could actually take even longer.
Why Buy Now?
Oil is a resource we will still need for many years to come, and despite the lower prices right now, a rebound is inevitable. It may be a good idea to invest, but it is important to invest wisely. Never put all of your money into a single type of investment. Spread the money into different areas. Take the time to research the companies you are considering as an investment as well to make sure they are viable and have a good chance of surviving the current drought.
About Oil Works Inc.
Oil Works, Inc. is a complete drilling rig equipment manufacturer and service provider based in the Permian Basin for over 20 years. OWI’s product and service offerings include Derricks, Substructures, Drawworks, Mud Systems, Walking Systems, Power Generation, Control Systems, Iron Roughneck Repair and Upgrades and complete Rig Solutions built to API and ISO standards. OWI is also proud to offer 24/7 Service and Support.