A study released by the American Petroleum Institute (API) contains bad news for middle-class Americans. According to the study, ownership of America’s oil and natural gas companies is “broadly middle class.” The assumption might be that this study was a reaction to the recent Deepwater Horizon incident, but it was released in September of 2007. In fact, it isn’t only middle-class Americans who are investors. Shares in operating companies like ExxonMobil, ChevronTexaco, and ConocoPhillips are available to anyone who wants to buy them. Unlike national oil companies, which do not allow share purchases, international oil companies (IOCs) are publicly traded entities. With that said, it should come as no surprise to find IOCs in the mix when you take a look at your 401k investments. If you’re not invested in at least one operating company, you are in the minority. According to the study author, Robert J. Shapiro, undersecretary of commerce for economic affairs under President Bill Clinton, “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% of shares of public companies are owned by company executives.” Instead of company executives holding shares, Shapiro said, “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.” So here’s some food for thought. According to the study: • Nearly 43% 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 US households with a median income of $68,700. • Other institutional investors like pension funds own 27% of IOC shares. In 2004, more than 2,600 pension funds run by federal, state, and local governments held almost $64 billion in shares of US oil and natural gas companies. The frightening part of this statistic is that 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. • 14% 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. If you're interested in hearing more about oil company investment, can click here to listen to the interview with Robert Shapiro and John Felmy in a segment of Energy Tomorrow Radio called, “Do you own an oil company?”
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