How Will The Budget Deal Affect Your Investments In 2014?
It came as a surprise to many when congress rolled out the recent budget agreement last week passing the deal with a 64-36 vote in the Senate and a 332-94 vote in the house. Prior to this quick and decisive action by the congress on the budget, our current Congress has been characterized by bickering and the inability to accomplish anything purposeful or significant. Their inability to compromise and make a decision led to the shutdown of the government earlier this fall. This is why it came as a shock to so many when a deal was passed so seamlessly in both the House and Senate regarding a budget agreement. While it was a relief to see a decision being made, the budget deal also has some promising things hidden within its pages for investors.
How The Budget Deal Created Investment Potential For 2014
In addition to a budget and spending agenda, contained within the budget deal is a treaty with Mexico that is extremely bullish for energy investments. Back in 2012, an agreement was made with Mexico allowing the development of hydrocarbon reservoirs in the Gulf of Mexico that straddle international borders. This area of oil and gas reserves is known as the Western Gap. Since then, Mexico ratified the bill in April of 2012, but congress had not yet officially approved the deal. A deadline of January 17th 2014 was approaching and needed to be solidified. The budget deal contained a treaty allowing U.S. companies to forge a partnership with the Mexican company Permex to co-develop the oil fields in the gulf.
Regardless of your opinion on the budget deal, the treaty included in the deal allows U.S. oil companies to once again develop and improve their gulf oil production, which has been in decline since the big BP oil spill in 2010. Output of oil from the Gulf made up only 17% of production in 2013, which was down from 20% the preceding year. With the new allowances the treaty enables, this downward trend has the opportunity to reverse itself. There are many U.S. companies that now are in prime position to profit and improve their production going into 2014. Next year alone, we will see the Gulf oil production increase to 1.5 million barrels a day, with the ability to expand as high as 1.9 million barrels/day by 2020.
As an investor, it’s time to shake off the losses experienced after the BP oil spill and look ahead into 2014 as a brand new investment venture. With the help of the budget deal, gulf energy production could be a tremendous investment opportunity going forward. For more information about how to incorporate gulf oil production into your investment portfolio, speak to a Redhawk Wealth Advisor near you today.