When politicians promise to “stick it to Big Oil”, just who do they think they are sticking it to? A new study commissioned by the API, and done by Robert J. Shapiro of the former Clinton administration, indicates that “Big Oil” is largely middle class. The API is hosting a conference call today to discuss the findings, which unfortunately I was unable to make. But below is the press release summarizing the findings.
New study finds ownership of America’s oil and natural gas companies “broadly middle class”
WASHINGTON – Who owns ‘Big Oil?’ It’s not who you think. As Congress debates national energy policy, a new study finds that ownership of oil and natural gas company shares is made up of a broad cross section of Americans.
“This study disproves the popular misconception that ‘Big Oil’ is owned by a small group of industry insiders. In reality, across the oil and natural gas industry only 1.5 percent of shares of public companies are owned by company executives,” said study author Robert J. Shapiro, undersecretary of commerce for economic affairs under President Bill Clinton. “The data show that ownership of industry shares is broadly middle class, with the majority of industry shares held by institutional investors, often on behalf of millions of Americans through mutual funds, pension funds and individual retirement accounts.”
API Chief Economist John Felmy added: “When politicians seek to punish these companies and ‘take their profits,’ they are not targeting industry executives but the hard-earned savings of working people.”
Shapiro and economist Nam D. Pham’s study was commissioned by API. The study shows that:
1. Almost 43 percent of oil and natural gas company shares are owned by mutual funds and asset management companies that have mutual funds. Mutual funds manage accounts for 55 million U.S. households with a median income of $68,700.
2. Twenty seven percent of shares are owned by other institutional investors like pension funds. In 2004, more than 2,600 pension funds run by federal, state and local governments held almost $64 billion in shares of U.S. oil and natural gas companies. These funds represent the major retirement security for the nation’s current and retired soldiers, teachers, and police and fire personnel at every level of government.
3. Fourteen percent of shares are held in IRA and other personal retirement accounts. Forty five million U.S. households have IRA and other personal retirement accounts, with an average account value of just over $22,000.
I doubt that this will impact much on the legislation being debated, but one wonders if congress understands that oil companies are not owned by a handful of rich white guys. Sure, there are some rich white guys who own lots of shares, but that’s not who will be primarily impacted by punitive legislation.