… The Answer Might Surprise You
If you’re wondering who owns “Big Oil,” chances are good the answer is “you.” If you have a mutual fund account, and 59 million U.S. households do, there’s a good chance it invests in oil and natural gas stocks. If you have an IRA or personal retirement account, and 46 million U.S. households do, there’s a good chance it invests in energy stocks. If you have a pension plan, and 61 million U.S. households do, odds are it invests in oil and natural gas.
Contrary to popular belief, and what some politicians might say, America’s oil companies aren’t owned just by a small group of insiders. Only 2.9 percent of industry shares are owned by corporate management. The rest is owned by tens of millions of Americans, many of them middle class.
A strong oil and natural gas industry is a vital part of the retirement security for millions of Americans. State pension fund investments in oil and natural gas companies are providing strong returns for teachers, firefighters, police officers, and other public pension retirees, according to a Sonecon study. Returns on oil and natural gas assets in the top two state funds in 17 states, which include more than half of all the people covered by state and local pension plans in the U.S., averaged $2.30 for each dollar invested compared to $1.68 for other assets in these funds from 2005 through 2013.
The oil and natural gas industry is a major contributor to the health of these funds, many of which face huge future payout obligations. While oil and natural gas stocks made up 4 percent of public employee pension plan holdings, they accounted for 8 percent of the returns, outperforming other investment classes by two-to-one. During good economic times, or challenging ones, oil and natural gas investments far outperformed other public pension holdings.
Putting Earnings in Perspective
- Who Owns the Oil Companies
When politicians talk about taxing “Big Oil” or taking their “record profits,” they should think about who they really would be hurting
- Earnings by Industry
It may seem surprising that oil and natural gas earnings are typically in line with the average of other major U.S. manufacturing industries
- Earnings Compared to Manufacturing
Earnings: Keeping America going strong
- Largest Oil and Gas Companies
U.S. companies face stiff competition for market share
- Capital Spending for U.S. Projects
To understand the oil and natural gas industry one must recognize it as an industry characterized by long lead times, huge capital requirements and returns realized only decades later in the face of very real investment risks
- Return on Investment
The return on investment for the industry turned sharply lower than the returns for the S&P Industrials during the recent downturn in the economy
- Investments to Reduce Emissions
The U.S. oil and natural gas industry is spending billions of dollars developing new advanced energy technologies to reduce greenhouse gas emissions and meet future energy needs
- Share of Net Income
Adding value for shareholders
- Taxes Paid by the Oil and Natural Gas Industry
U.S. oil and natural gas companies pay their fair share of taxes and are a tremendous source of public revenue
- Effective Tax Rates Among Industries
The high effective tax rates associated with the oil and gas industry are a function of the nature of the business
- Economic Consequences of Higher Taxes
Raising taxes on the oil and natural gas industry will not lower the price of fuel