America’s Oil and Natural Gas Industry Benefits Americans

Mark Green
Posted October 21, 2014

Sonecon’s updated look at ownership of the U.S. oil and natural gas industry shows that the benefits of a successful, rigorous industry sector continue to accrue to a broad range of Americans – who are the industry’s true owners. Here’s what we mean by broad:

• Public and private pension and retirements plans, including 401(k)s and IRAs, hold 46.8 percent of all shares of U.S. oil and natural gas companies in 2014.
• Asset management companies, including mutual funds, hold 24.7 percent of oil and natural gas shares.
• Individual investors hold 18.7 percent of all oil and natural gas company shares.

Combined, that’s 97 percent of all oil and natural gas company stock – held by millions of Americans across the country. These include retirees and middle-class Americans saving for retirement, said Kyle Isakower, API vice president of regulatory and economic policy, during a conference call with reporters:

“The principal takeaway of this study is this: When oil and natural gas companies do well, so do millions of their owners all across America.  It concludes that a large proportion of the benefits of oil and gas company stock ownership goes to middle class Americans.”

A Sonecon chart illustrates:

Sonecon’s report belies the myth that America’s oil and natural gas companies benefit only a select few. The exact opposite is true. Just 3 percent of oil and natural gas company stock is held by company officers and board members, the report found. That means that when oil and natural gas companies report quarterly earnings, as a number will starting next week, benefits are broadly distributed.

Broad ownership underscores the importance to America and Americans of a strong oil and natural gas industry sector. Sonecon Chairman and Chief Executive Robert J. Shapiro:

“The oil and natural gas industry is like a handful of other industries in the United States in that it forms the backbone of the infrastructure for economic life. We could say the same thing of telecommunications, for example. (The oil and gas industry) cannot do well unless the economy is doing well, and the economy can’t do well unless it’s doing well.”

Broad ownership also encourages sound corporate judgment – reflected in earnings. Shapiro:

“Ownership of basic industry like oil and natural gas is really quite important both economically and socially. It matters economically because broad ownership creates the incentive for companies to invest most productively, because if they don’t shareholders move out of those companies and stock prices fall. In addition, broad ownership generates capital for key industries and … broad ownership means the industry does well then large numbers of people will benefit.”

Previous studies by Sonecon show this is what’s occurring, Isakower said. He noted a 2011 Sonecon report showing that oil and natural gas stocks significantly outperformed other investments in major public pension funds, and a 2012 report showing that 2.1 percent of college and university endowments in 2010-2011 were oil and natural gas stock, which generated 5.7 percent of all endowment gains. Isakower:

“The U.S. oil and natural gas industry is a major part of our nation's economy. It supports 9.8 million jobs and pays more taxes than any other industry and at higher effective rates. As this new Sonecon study shows, it also benefits millions of Americans who are its true owners.”