An investment analysis of the petroleum industry

Abstract

The petroleum industry in the United States has received much attention recently due to the "energy crisis". The petroleum industry supplies more than 75 percent of the energy consumed each year. However, the industry is faced with rising crude oil prices, price controls, environmentalism, reduced demand for petroleum, and tax revisions. These factors can have severe effects upon the potential for investment in the petroleum industry.Investment in the stock market can be a rewarding experience. The bull market situation can provide substantial capital gains. Investment in the proper stock can be an excellent hedge against inflation. However, the selection of an industry and finally a specific stock for investment should be based upon a thorough analysis of investment values.The problem in this investigation was to determine the advisability of investing in the petroleum industry and to select the specific stock in the industry with the most potential for investment. The purpose of this report is to provide the investor with the preliminary background information necessary for making the decision to invest in an oil company stock. It must be noted that such an investigation can analyze the growth of a company, determine the stock price history, and project future trends. However, there still remains a degree of risk in any stock investment.The first section of this report evaluates the general stock market trend at the present time. The next section investigates the various factors affecting the petroleum industry. The third section analyzes five petroleum companies and their stock market performance. Finally, the conclusions drawn from the investigation are presented.