"Public pensions rely on two major sources for funding -- employee and employer contributions and investment returns. Although the government contributions have recently been the center of political debates in many states, investment assets play a key role in keeping promises made to public employees by providing more than half the funds' revenues." (Reuters 21 Apr 2011)

Investments do play a key role in keeping our promises to public employees and oil and natural gas companies play an important part in those investments. Twenty-seven percent of America's oil and natural gas company shares are held by pension funds, and those holdings are providing a significantly larger return than other assets in state pension plans in Michigan, Missouri, Ohio and Pennsylvania, according to a new study conducted by Robert Shapiro, chairman of the economic advisory firm Sonecon and former Undersecretary of Commerce for President Bill Clinton.

While oil and natural gas stocks made up 3.1 to 5 percent of public pension holdings in the four states studied, they accounted for up to 11.6 percent of the returns from 2005 to 2008. The impact is even greater when looking at the two largest public pension funds in each state, covering public school employees and state government workers. Oil and natural gas holdings made up 3.3 to 4.8 percent of these funds but contributed as much as 12.2 percent to the funds' total gains from 2005 to 2009. In comparing the performance of oil and natural gas companies against all other assets within these two largest funds, oil and natural gas returned, at a minimum, nearly three times that of all other assets (2.9x to 4.4x).

At a time of increased uncertainty in the world, two facts remain certain: America has tremendous oil and natural gas reserves, and developing these resources serves the interests of all Americans. So when you hear that America's oil and natural gas companies are "doing just fine," think about what that means for America's public employees. It means strong investment growth and the promise of a fully-funded retirement. Who would want to take that away?