WASHINGTON, April 25, 2011 – Oil and natural gas company holdings in state pension funds are providing disproportionately strong returns for retirees, according to a new study by Sonecon, commissioned by API. While oil and natural gas stocks make up an average of 3.9 percent of public pension holdings in four key states, they accounted for an average of 8.6 percent of the returns in these accounts from 2005 to 2008.
“During vigorous expansion or deep recession, oil and natural gas investments outperformed other public pension holdings by more than two times,” said Kyle Isakower, API vice president of regulatory and economic policy. “The oil and natural gas industry supports millions of jobs and a significant portion of our economy, and the retirement benefits of America’s teachers, police officers, and thousands of others with a pension or 401k.”
The preliminary data examines public pension funds in Michigan, Missouri, Ohio and Pennsylvania. The full study on the performance of oil and natural gas company holdings in state pension funds will be available this summer. Click here for a copy of the interim report.
The impact is even greater in the states’ two largest public pension funds: the fund for public teachers and other school employees and the fund for state government employees. Oil and natural gas holdings make up an average of 4.0 percent of these funds but contribute an average of 10.4 percent to the funds’ total gains from 2005 to 2009. Returns on oil and natural gas assets in these state funds averaged 46.5 percent, compared to 13 percent for all other assets, according to the Sonecon study.
“Millions of American retirees rely on the income and capital growth these companies provide,” Isakower said. "And all Americans benefit from the job creation and economic growth supported by the more than $2 trillion invested in U.S. capital projects over the past decade."
America’s oil and natural gas companies are owned by tens of millions of Americans, according to an earlier Sonecon study. More than 29 percent of shares are held in mutual funds; 27 percent are held in pension funds; 23 percent are owned by individual investors; 14 percent are held in IRAs. Five percent are held by institutions and only 1.5 percent of industry shares are owned by corporate management.
API represents more than 470 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America’s energy, supports more than 9.2 million U.S. jobs and 7.5 percent of the U.S. economy, delivers almost $100 million in revenue to our government every day, and, since 2000, has invested nearly $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.