Who Owns Big Oil?

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.

20 thoughts on “Who Owns Big Oil?”

  1. I’m betting you are talking about the stockholders, which might be people like you and me. Though it’s hard to tell from the list of largest shareholders.

    It’s likely I own a few shares of various big oil companies through my mutual funds, but nothing near the 3 million shares owned by Lee Raymond in 2005.

    But I don’t want to “stick it to Big Oil” anyway. I’d be content if they got no more or less special treatment than any other energy company.

  2. I once heard Ben Stein on the news just bringing down the hammer on people who want to stick it to oil companies. “There are guys with families out there working these dangerous jobs out on oil rigs. Don’t you think they should get paid?” “Remember when you’re talking about big corporations, you’re talking about pensioners, widows, and orphans.” And my favorite: “If you think they’re making outrageous profits… If you have a couple of twenties in your pocket you can buy a piece of the company.”

    Of course when Bill Maher referred to Lee Raymond as ‘Fat Bastard’ it had a ring of truth to it too.

  3. how about NATIONAL OIL COMPANIES-opec and non opec.

    it’ll be intereting to see whoever stick it to other nations, especially to those which are supposed allies.

  4. So oil hit $82 today, Robert. So whoever owns “big oil” should be doing well.

    But that brings up your bet, with the entire high projected demand 4th quarter yet to come. Nervous yet?


  5. Two guesses here, apart from the shareholders. When they growl “Big Oil,” the politicians are thinking about 1) high oil prices and 2) high gasoline prices.

    When going with (1), they seek to reduce Big Oil profits with various tax schemes. This is really sticking it to the consumers, because the effect will be to dampen investment in marginal oil projects and reduce marginal supply, putting additional upward pressure on prices.

    When going with (2), they see the Exxon sign on the gas station, and imagine in some kind of haze that any punitive action (price caps, hot fuel compensation, etc) taken against gasoline dealers is a hit on Big Oil. In this case they’re mostly sticking it to the retailers, mainly small businessmen. I don’t know what percentage of revenues the larger E&P companies get from direct gasoline sales to drivers, but I’d guess it’s very small.

  6. Robert asked, “…just who do they think they are sticking it to?”

    My guess is that most of the oil company stock is owned by mutual and pension funds. Most oil companies are “blue chips” and are a safe investment for fund managers.

    ArmChair261 said: “When they growl “Big Oil,” the politicians are thinking about 1) high oil prices and 2) high gasoline prices.”

    They are thinking wrong. There wouldn’t be high prices if so many people didn’t want to buy the stuff.

    I walk three miles to work everyday, and the reason for high oil prices is apparent to me every morning and afternoon — it’s the solid stream of single-occupant cars and SUVs rolling down the road.

    Until we stop burning the fuel it takes to move a 6,000 lb SUV just so a single 120 lb woman or 200 lb man can get to work in an insulated steel cocoon, there is no hope of driving fuel prices down.

    Sometimes I growl at those people and say to myself, “You’re the reason I have to pay so much for fuel when I do need to drive my car.”



  7. That would be me, and the Mrs. – Queen of Katy. She was a landman and accountant for 20 years.

    BTW – the QoK says she is responsible for setting oil prices. Conspiracy solved. She psychically sends out the orders every day. Makes about as much sense as other explanation.

  8. Today “Big Oil” should refer to the thug states which control most of the world’s oil fields.
    The international oil companies simply aren’t the shot-callers anymore. Oh, they want to make lots of money, and are loyal only to themselves (not even shareholders, that’s Boy Scout stuff).
    But why worry about Chenron when Venezuela seizes property, Iran kills people for being different, Iraq is run by sadistic anarchists and religious lunatics, Russia is run by a Putin-mob, Nigeria is an insane asylum, KSA doesn’t let women even drive, etc. Libya?
    The Oil Gods favor cruel, backward despots.
    Outside of Canada, there is no oil-exporting country in which the phrases “human rights,’ or “government for the people” or “property rights,” or “contract law” isn’t derisively laughed at. you would probably get shot for speaking those phrases too loudly.
    What is odd is that neither party wants to point this out. My guess is that the D-Party is stuck in the 1960s and still hates Exxon, while the Repubs are complicit with the corrupt regimes just mentioned.

  9. I do, lots. Oil companies provide an extremely useful product, which unfortunately is being used so poorly and wastefully that it is destroying the environment. Personally, I use very little oil, but getting a cut of the profits helps me deal with the *#%$&*!!! roaring by in their ecocidal vehicles.

  10. You make a good point about ownership. Many, many, of us own Big Oil stock through our mutual and retirement funds.

    But ownership isn’t the whole deal. John Kenneth Galbraith made a good point (way back in the 40’s or whatever) that the US had moved to a “post capitalist” economy.

    Managerial power had become (and is) more important than power through direct ownership.

    Your mention of Lee Raymmond kind of shows that. He is the one people focussed on, not because he had the ownership, but because he had the power (and was able to fund global warming denial and other BS).

  11. Benjamin Cole said…

    ‘The Oil Gods favor cruel, backward despots.
    Outside of Canada, there is no oil-exporting country in which the phrases “human rights,’ or “government for the people” or “property rights,” or “contract law” isn’t derisively laughed at. you would probably get shot for speaking those phrases too loudly.’

    I would point out that Norway is usually cited as a model oil exporting country, where local jobs are created and petroleum revenues are saved in a public trust.

  12. Well, the consumer is ultimately the person who gets “stuck”, since any costs heaped on a business get passed down to its customers.

  13. I would point out that Norway is usually cited as a model oil exporting country, where local jobs are created and petroleum revenues are saved in a public trust.

    Any Mouse,

    Excellent observation. You can also the UK to the list of fairly responsible oil exporting nations.

  14. Nigel,

    The UK ceased being a net exporter a few years ago. In case you haven’t seen, the UK’s North Sea oil production has been steadily dropping for 7 or 8 years now.

  15. I kind of wonder what people with the sentiment of Benjamin Cole would have us or our politicans do. Countries like Venezuela and Iran are sovereign nations with the right to control their resources in whatever manner they see fit, even if that means nationalization that hobbles the free market. Unless we suddenly decide we have the power to push free market reforms on them by force–and I mean the military kind of force–then we have no choice but to accept whatever method of distribution they see fit. Yes, they act in their own best interest. So do we.

    I have to ask whether the actions of people like Hugo Chavez are actually all that harmful to our interests. Free market fans usually say nationalization reduces innovation, exploration, and development, slowing the flow of oil, reducing supply and driving up prices. I can accept that. But as is often discussed, won’t increased prices eventually result in a change of habits and a move toward efficiency? Yes, Chavez is acting in his own interest, but aren’t his actions actually slowing the use of oil and extending the life of the resource?

  16. I am disappointed that the final version did not mention even a bit about “power.”

    That does a lot to explain the issue from the standpoint of behavioral economics.

    See also “The Winner’s Curse” by Richard H. Thaler and “Cheating Monkeys and Citizen Bees” by Lee Dugatkin.

  17. iWell, not that this is the forum for it, but I do not favor military intervention anywhere (including Iraq), except obvious humanitarian efforts (stopping a genocide).
    The fact that thug states control the world’s oil does require changes in our energy policy, probably towards becoming much more independent.
    I welcome anyone who thinks thug states are not so bad to go live in one. And it is the thug-elites or religious fanatic-thugs who control the natural resources in those countries, not citizens. There is nothing to admire about such “sovereign nations” though their legitimacy is extremely suspect. Still, sending in the B-52s probably will do more harm than good.
    I happily stand corrected on Norway, but my understanding is that the North Sea is declining, and so Norway is no longer a major exporter. GB already finished.
    I stand by the statement that the Oil Gods favor cretins and thugs.

  18. Benjamin Cole said…

    “I happily stand corrected on Norway, but my understanding is that the North Sea is declining, and so Norway is no longer a major exporter. GB already finished.”

    Actually, Norway is still the third largest exporter in the world, with current production at 2.7 million barrels per day. You are correct in that this figure is down from their peak of 3.1 MMBPD achieved in 2001 I believe.

  19. I (Kay Cashman) work for Petroleum News, a small weekly newspaper based in Anchorage, Alaska. We don’t have oil industry connections and have gained a reputation for objective reporting on the industry. As a result, general circulation pubs and AP pick up many of our articles. We also don’t write editorials.

    But I’m concerned about the way the oil and gas industry is ‘villainized’ in the news, in books, movies, etc. I swore I would never write an editorial but I have been tempted. Loved the story, “Who owns Big Oil.”

    We set up a book club, http://www.pnabookclub.com, to put people working (or retired from) the industry in touch with authors of popular fiction and non-fiction books: largely to educate them about the industry if their books contain misinformation; sometimes to congratulate them for accurately portraying the science behind the industry.

    We’re also building an author’s resource center on the site for all types of writers to use when they are doing research, and looking for experts available to advise writers by email or telephone. If you’d like to volunteer, email me at publisher@petroleumnews.com. Sorry, it’s not a paid service. Small book clubs like independent bookstores are a work of love.

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