The Hiking Oil Price and the Recession

2011 might have been the toughest in the recent past with global economy tumbling down to its knees. Many investors felt the pinch and some ventures had to close shop. The majority of the blame was pointed at the price of fuel that has been on a constant rise. As a result, prices of basic commodities aimed for the roof as manufactures struggled to cushion themselves from losses as a result of increased production.

Many couldn't wait for the end of the "doom year" hoping that this year, things would be better. Unfortunately, economists have no good words for the anxious populace. Recession if far from over and if you thought 2011 was the worst year of mankind, then you should brace yourself for even tougher economic times in 2012, especially in West Europe as there seems to be no way out of a glaring recession this year.

The Arab Spring and the Middle Eastern exporters of oil have no enticing words to those whose reliance on oil is massive as the price is set to rise higher in 2012. This is set to affect the growth and expansion of the world's fastest emerging economic giants; China, India, Russia and Brazil. The four currently make up a quarter of the world's economy and are set to reap big in the world's 2012 economic growth. Even though the four are not shielded by the sovereign debts shambles enjoyed by other western world's countries, they have lower debts, stable banking systems, huge reserves and even more importantly, they have an enhanced inter-country trading that guarantees their products markets all year long. The more advanced economies are bound to lose out this year, just like they did in 2011.

In 2010, the price of crude oil was $79 a barrel, but a year later, this price shot to an average of $111 in 2011. With this set to rise further, European nations are likely to experience another year of escalating cost of basic commodities. The Middle East nations have realized that they can use the oil in their countries for the very reasons those they export to use. They are setting up industries and utilizing their oil from within, a trend that is causing both an escalation of the price as well as biting shortage. Even though the Asian nations currently consume only a fraction of what the world consumes, their demand is on a rapid rise.

Fuel consumption per day was 89 million barrels per day in 2011 up from 88.3 million in 2010. Projections have it that the consumption may rise to 95 million barrels per day in 2016, a whopping 25% increase in 16 years. Although supply has increased too, with OPEC reporting a 30.7 million barrels a day and global production standing at eight nine million barrels a day in 2011, the price has not been affected positively as it has remained at a stubborn $100 a barrel.

The price of oil will definitely define the performance of major economies in the world and unless the world leaders and major economy players and industrialist nations that consume a large percentage of this commodity, then we should brace ourselves for tougher times in 2012.

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How Do Oil and Gas Investment Companies Locate and Recover Oil?

Geologists are responsible for the discovery of oil at different locations. They use various techniques to discover oil, as they study the area for conditions that would indicate the presence of trapped oil. Finding the right source rock and the reservoir rock will lead directly to the presence of oil. Satellite images too are used in figuring out areas where oil could be present, in addition to studying surface rocks and terrains.

They use many techniques including use of sensitive gravity meters, which indicate very tiny changes in the gravitational field of the earth, which could indicate the presence of flowing oil. Seismology techniques too are used where shock waves are passed through rock layers, and the reflected waves are studied to check for the presence of oil. Thus, once geologists make a discovery, preparations are made to extract oil through drilling.

Before drilling for oil can commence, the site where drilling is to be carried out needs to be prepared. These preparations include building access roads to the location of drilling, and finding a source of water. If no natural sources are available in the vicinity, pits are created to dispose the rock cuttings that get extricated during drilling. Pits are covered in plastic to prevent any environmental problems. If the site is ecologically sensitive, the extractions will need to be ferried away from the site.

Before the actual hole is drilled, they dig a cellar. This acts as a space for the workers to move around and also to put away the equipment. Before the actual rig is put in place, a smaller hole is dug with a smaller drill truck. This part of the hole is wider and shallower. After these preparations are complete, the rig is brought in.

The oil rig has many components such as a power system, mechanical system, rotating equipment, casing, circulation system, Derrick drill, and blowout preventer. The power system of the rig is made of a diesel engine, or electrical generator, and acts as the main source of power supply.

The mechanical arrangement of the rig is driven by electrical motors, and it has a hoisting system- for lifting intense loads, and turntable- which is part of the drilling machinery. The rotating equipment is used for rotary drilling.

Casing is made of large diameter casing pipes that line the drilled hole, and prevent the hole from collapsing. They also help in the circulation of mud. The circulation system pumps in mud to lift rock cuttings from the drill to the surface.

The Derrick supports the drilling apparatus, and its length helps in adding new sections of drill pipe to the drilling apparatus as it progresses. The blowout preventer is a high pressure valve that prevents a blowout.

The drilling progresses, and once the presence of oil is detected, the well needs to be prepared for oil extraction. Acid is pumped in, which clears channels and leads oil to the well. Proppants too are pumped in and hydrofracking is done. Once the oil has started flowing into the well, the rig is removed and equipment for oil extraction is put in place.

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Alternatives - Investment in Carbon Mitigation Projects

Investors can earn saleable emission reduction credits by investing in projects having Clean Development Mechanism permits or projects registered under the Kyoto Protocol. The emission reduction credits generated under Kyoto Protocol can be bought by the countries committed to stimulate emission reduction and development. It is an ethical investment opportunity and institutional investors have realized huge profits in carbon credit investment strategies. Hence, it is believed to be a gainful opportunity which can provide long time stable profits.

Concerns over global warming

Environmentalists have been raising concerns over global warming from decades and the ill effects of global warming is now visible in the form of poor food grain production, climate change and increasing natural disasters. Carbon credits provide a method to regulate harmful emissions across the globe which is monitored by offset groups that have the authority to authenticate emissions and give credits.

Cap-and-trade mechanism

Countries are adopting new ways to reduce emissions and carbon credits are given for absorbing a fixed amount of emission from the atmosphere. Cap-and-trade tax was implemented by countries, which combined emission trading mechanism and the voluntary CO2 market price, to determine the rate of credits.

The cap-and-trade mechanism was first implemented by the European Unions Emission Trading System which attracted attention of many countries, although, it was also criticized because many could not understand how it will work. The initial three years of CO2 trading (from 2005 to 2007) is considered the trial period of cap-an-trade mechanism which helped to create a background for many other forms of CO2 trading schemes.

Today CO2 is traded in many forms and commitment has been made by many developed and developing countries to reduce emissions by 2050 in the range of 30 - 80%. Some large-scale industries provide Renewable Energy Certificates to trade emission credits and companies are investing in renewable energy resources to reduce emissions.

Carbon credit trading

Carbon credit trading refers to the scheme, in which, carbon will be purchased by industries that are emitting higher amounts of carbon dioxide into the atmosphere, and this will help to cut emissions. These industries will have to compensate for emissions to get neutral and different forms of environmental calculators are used to assess the amount of emissions.

Generating carbon credits

Carbon credits are tradable and many projects have been created to absorb carbon from the atmosphere to generate credits. These credits can be sold to industries to neutralize the carbon emissions, and forestation project and agriculture are two simple and low investment methods to generate credits. Forestry creates sink which can absorb more than 20 to 30% of emissions, and Capital Alternatives provides opportunity to invest in reforestation projects in Amazon rainforests and Africa to generate regular tradable credits. To know more about the opportunity, contact: info@capitalalternatives.co.uk

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Investing In Agricultural Stocks - Temporary Trend Or Inteligent Investment?

The discovery of agriculture has played a key role in propelling human civilization. More so, agriculture has led to great advances in science and human development. And, in the current era of globalization, the relevance of agriculture cannot be underestimated. Some specialists believe that investing in agricultural stocks guarantees more returns than investing in other commodities such as gold and precious metals. Trading in agricultural stocks involves buying and selling the stocks of companies taking part in the farming business.

Here are some reasons why you should consider investing in agricultural stocks:

Foremost, the demand for food to feed the ever-growing world population will always increase. The current world population is approaching 7 billion. These people will need food to eat. This means that many companies will come up to produce adequate food to sustain this population. Therefore, investing in agricultural stocks will always lead to profits. It is estimated that the world consumes an average of 3,000 bushels of grain crop every second. This figure is about two times what we consumed back in the 1970s. If the current trend continues, it is estimated that this figure will more than double over the next two decades. This illustrates that the amount of pressure on the global food supply network is huge, and this should give you a good reason to invest in agricultural today. Next, investing in agricultural stocks provides a good blend between social work and business. If you invest in agriculture, you will be spurring the country's economic growth and creating jobs for other people. Particularly, this would lead to better quality of life for those in the rural areas. As such, it is a win-win situation for everyone; and more so, you are making another person's life better. Some businesspersons do not like throwing their money in agricultural stocks because they think it is a risky avenue of investment. Just like any other type of investment, agricultural stocks have their own risks and benefits. However, its risks can easily be surmounted if you learn how to manage them. And, the advantages of investing in the agricultural sector far outweigh its disadvantages.

To this end, it is evident that investing in agricultural stocks is the way to go if you are a savvy investor. Besides earning you good returns, you will be doing your part in kicking out hunger from the world. Investing in the agricultural sector is the sure way to go, start today!

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The Top 10 Opportunities in the Oil and Gas Industry

Oil and gas have a great impact on the world economy because of the crunch of energy sources. Though there are various risks involved in setting up an oil venture, there are widespread opportunities as well. The industry is a money-making cake that has always bagged the top position in the economy graph. Oil and gas industry is a powerful one and it overturns the economies of many countries.

The top ten opportunities in the industry are listed below.

1. Frontier acreage: It is probably the main thing that has an impact over the industry. The operational boundaries have increased with time and so has the competency. Frontier acreage was not in the technology 30 years back but has increased gradually.

2. Unconventional sources: The energy demand is high and hence opportunities are wide for unconventional sources of energy.

3. Conventional reserves in countries like Iraq and Nigeria have also attracted investors because of flexible government policies. But areas near the Arctic still pose a threat to the operators because of its environmental challenges.

4. Market demand is almost always lying between 26% and 51%, because of which subtle investments are made every year.

5. The Partnership between the IOCs (International oil companies) and the NOC's (national oil companies) have boosted the economy and faced difficult policies bravely.

6. Oil companies are now investing in R&D and innovation so that new techniques can be found to make extraction more environment-friendly.

7. Biotechnology seems to be gifting to the oil industry with emergence of second and third generation of bio fuels.

8. Strategic partnerships among cross sectors have evolved into major investments in technology.

9. Oil industry, just like other industries, runs on the regulatory confidence for business survival. Since now various national governments are involved in energy sector so licensure maintenance is not so difficult

10. There have been many acquisitions in the competitive industry, which have been promising for the world economy. Mergers and acquisitions in the oil industry have a major impact on the world economy.

Opportunity Ladders

It presents the snapshot of the top ten opportunities for companies in the oil and gas sector. It is based on research by people who are into the industry for many years and are well acquainted with all the boons and banes. They give four drivers of success that are:

· Customer reach

· Operational agility

· Cost competition

· Stakeholder confidence

These are outlined to study the market and companies' potential to face the challenges that are faced by the oil companies.

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Fundamentals of Binary Options Trading

The latest trend catching up fast for making fast income is trading in binary options. Although it is a fairly new platform it can help return profits from 75 to 80 percent per hour. It is more or less similar to the more traditional means of investment. It is very straightforward and its fundamentals are similar to the more conventional trading methods. These principles set traders that reap big profits stand apart from the rest. Making money out of speculative investments is no easy task but if played well with the fundamentals then it can turn out to be a huge source of income. The following points must always be remembered when entering the world of binary options:

Improve your trading skills

Traders are usually advised to put their focus on one special class or type of market to make the best out of their trading skills. This causes them to have a sounder and deeper understanding of how the market really moves and why it moves that way. Developing a shallow knowledge of all the different types of trades makes you a 'jack of all and master of none' which in the longer run is usually not very profitable. This is also true for the case of Binary options and trading.

Money management

Traders sometimes lose sight of what is easy and what is more profitable. While they are making profits consistently they might lose sight of the small things that matter the most. In Binary options and trading, effective money management is the key. Strategies can be simple as the losses and the gains are relatively fixed and one does not require paying a brokerage fee to enter into the trading sphere. But in all this traders must not forget about the other fees such as withdrawal fees and manage them wisely. For example: consider two traders A and B. Both of them have the same amount of capital gain but A takes care of the smaller miscellaneous fees such as the withdrawal fees unlike B and thus makes the number of withdrawals accordingly. This causes a big difference in the net income they make. Thus money management causes A to make more profits than B.

Mere emotion is not enough for successful trading

Many investors trade on the basis of their feeling of how the markets are going to move. This is one of the most bogus ways of trading and not always effective. It sounds easy and comforting but it is usually not applicable. It is thus always wrong to trade without a strategy. If you are not taking the data and the analysis that is put together by some of the best minds in the business then more or less it is gambling! Basically trading on mere emotion is like gambling. You stand a 50-50 chance of making it. Traders tend to decide what action to take on the basis of technical analysis made at support and resistance levels along with the timely economic data usually released on quarterly basis. In the case of binary options which have a comparatively longer time of expiry the strength of the assets can be found out by a fundamental analysis before.

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