Consumer Energy Report is now Energy Trends Insider -- Read More »

By Robert Rapier on Sep 18, 2007 with 15 responses

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.

  1. By CWich on August 15, 2013 at 1:35 pm

    It now been 16yrs since this was written wonder who owns the oil companies now?

    [link]      
    • By gman on September 28, 2013 at 6:23 pm

      are you from the future?

      [link]      
    • By Debbie Knight on May 30, 2015 at 11:20 am

      Seems like most people are not big on reading comprehension. It’s very funny that one of the commenters that upvoted gman’s comment is named “reading4comprehension”.

      By my calendar, Clinton was in office 16 years ago.

      [link]      
  2. By Debbie Knight on May 30, 2015 at 11:15 am

    This article is a ridiculous piece of propaganda. If we quit giving tax breaks to Big Oil, the middle class will be okay with using that money on infrastructure and other REAL benefits. Let’s try it and see what happens!

    [link]      
  3. By Lorcan Bonda on June 5, 2015 at 4:19 pm

    This is a non-study, study. Basically, it is used to confuse the questions rather than enlighten — and articles like these confuse the issue more. There has been a recent update on this study in 2014 — http://www.api.org/globalitems/~/media/Files/Statistics/Who-Owns-US-Oil-and-Natural-Gas-Companies-Shapiro-Pham-study.pdf

    The study is incredibly convoluted. First, the study showed that 29.1% of oil & gas stocks are owned by individual investors and another 2.9% are owned by company management … So, is that higher or lower than 1%? My math says it’s a little higher. This number is skewed higher in the largest twelve integrated oil companies (40.4% is owned by individuals & investors.)

    The 43% which are owned by “mutual funds and asset management companies” is a convenient deflection, because they add “Mutual funds manage accounts for 55 million U.S. households with a median income of $68,700.” — everybody should see the clear fallacies. Why did they lump mutual funds and asset management companies together while telling us about the ownership of only mutual funds? Second, median income is a terrible value to use unless they weight the income for the amount that people hold — If one billionaire holds 90% of a mutual funds assets. And a million people with incomes of $60,000 hold the other 10%, the median income is $61,000 — but that number does not reflect how much is held by the billionaire compared to the paupers.

    The current numbers are 58.7% are owned by asset management firms and mutual funds, but only 33.7% of the total stocks are owned by asset management firms who also manage mutual funds. The other 25% are owned by asset management firms who do not have mutual funds (and basically represent only well-heeled investors.)

    “Other institutional investors like pension funds own 27%” — That is an amazing statement. Pension funds directly own 2.4% of oil stocks. However, that too is complicated because other pension funds own shares through mutual funds. In the body of the report, it says that 28.9% of shares are owned by public & private pension funds including 401ks, but there is little breakdown as to where they are listed.

    IRAs now own 17.9% of oil and natural gas companies — but only 67% of the owners of IRAs are owned by people earning less than $100,000 per year. That’s roughly the breakdown of the upper 10%. It doesn’t try to say how much of the dollar value of IRAs is owned by the upper 1%.

    The net result is that it is impossible to figure out how much is owned by the wealthy few compared to the middle class. This is important because oil receives large subsidies, although surprisingly that is difficult to find. It’s anywhere between $10 and $52 billion per year from Federal and State governments. The “U.S. fossil fuel subsidies at $37.5 billion annually, including $21 billion in production and exploration subsidies.”

    Back of the envelope calculations tell me that roughly 57.5% of oil companies are owned by the upper 1% and 42.5% are owned by the middle class. You can’t really get that information from this report, so it is a wild guess.

    [link]      
    • By Forrest on June 6, 2015 at 8:27 am

      Oil has historically generated extreme wealth to few. It’s a economic pinch point readily exploited by those of power and wealth. Few would lose the opportunity blessed them or offered to them to tap into wealth. We have relatively few such opportunities in a lifespan. Corruption and greed will usually make an easy path to such a narrow band width of wealth generation. Oil is the historical economic life blood of growing economies. It’s a natural resource requiring harvest rights to gain much like old days of whaling that at one time in U.S. history was also inelastic resource demand and able to generate extreme wealth to few. I’m sure that business activity, also, created many good paying jobs and it did supply much needed resource to country. The business wealth of whaling did propel our county economic engine and awarded credit to propel country to independence per some of the sector’s new found wealth. Problem was those few wealthy families that cannibalized fair open market competition and acted to cut off and control such operations to award themselves no compete wealth and power. To many of us are educated to prejudice thinking of capitalism or open market trade as the problem. It’s not and just the opposite, it the lack of such forces that only gained by passive and corrupt government politicians standing by with hand out. Government should always act to maximize competition and competitiveness of small business. Think of the billionaire wealth of Kocks, Tony Hayward, Tex Tillerson, Harold Hamm, Bass brothers, Rich Kinder, Ray Hunt, Will Kock, Boon Picken just to name a few. Private company wealth controlled to the few such as Apex Oil, Oak Hill Cap Mngt, Kinder pipelines, etc. It is impressive to see this petrol brotherhood in which such capability reigns. Good to have such competence within U.S. marketplace. Unlike most of the international community our businesses is held to high standards per U.S. commerce and oversight. Could the economic sector be managed better per counties best interest of citizens? Very much so! First the country should be highly motivated to conserve natural resources and avoid what Robert Rapier posted of missing historical opportunity of past with U.S. oil. That the country just let businessmen gobble up nations resources in a competition to sell as much as possible as cheap as possible in order to maximize time value of money investment returns. The action made a few rich at the economic loss of countries future wealth. If we had conserved resources per normal conservation efforts such as sustainable fish harvesting or forestry management our country would have maximized precious mineral wealth. Were doing the same thing currently. So, in that common sense American wisdom ask yourself, why are we not reining in petrol harvest? Why are we not maximizing alternative energy especially the bio processors of ethanol as this would naturally slow the progression of oil harvest? Maybe the pipelines should be controlled like electrical grid and assume the status of utility as this is a choke point to easily exploit wealth hence the lack of competition?

      [link]      
      • By Lorcan Bonda on June 8, 2015 at 2:13 am

        This is an article about who owns oil stocks in order to justify some $50 billion in subsidies in state and local governments.

        Capitalism is the best system, but we need “fettered capitalism”. In fettered capitalism the government is expected to encourage free and fair competition — by eliminating monopolies, through tax subsidies, and by ensuring that there is price fairness.

        Unfettered capitalism degenerates into into monopolies unless the government curbs that situation. Income inequality increases. That is what has been happening over the past thirty years.

        [link]      
        • By Forrest on June 8, 2015 at 7:28 am

          Unfortunately, government actions usually regulate big business to advantage. Pharmaceutical companies consolidated to afford the billion dollar per drug compliance cost of FDA. Auto companies have myriad regulations that stifle open market innovation and competition. Startup companies have a huge disadvantage. Rental property historically a good investment for retirees and a good deal for renters. Regulations moved the business to corporations and federal supply. Sometimes politicians gain ideals to loosen up and foment open market creativity such as the deregulated alcohol beverage production. Politics, power, popularity, greed, entitlements, prejudice, jealously, etc played by crafty politicians to corrupt democracy. Government solutions are extremely dangerous and always crude. Banking has regulated wealth. Notice politicians not motivated for example to regulate in support of easy safe guard regulations for small business to collect debts or for elderly to tap into wealth of lending money such as improving retirement income. Politicians fear citizen freedom and look to corporations to control as they pay politicians well. Remember, the continuing story of corp and fed gov’t hacking of citizen records. The politicians looking for quick action attacked Mom and Pop Landlord business and attempted to deflect criticism to them. They passed regulations that forced many out of business as it’s popular to beat up on the industry. Regulations appear to reward political cronyism i.e. hazard waste, Unions, gov’t employees, gov’t benefactors, supportive executives, constituencies, etc. Petrol knows how to play with politics and stab competition. Arab oil wealth is attempting to discipline U.S. fracking industry and push the bad boys to conform to play nice and join the role of price collusion. Also, a big push to pull the rug out of non petrol competition and claim ethanol, for example, the problem citizens should focus on.

          [link]      
          • By Lorcan Bonda on June 8, 2015 at 1:09 pm

            That’s not a reason to abandon regulations. Common sense would dictate that government needs to regulate markets against gaining a short term gain from long term problems (for instance, dumping hazardous waste in the ditch.)

            What we need is campaign finance reform so that people have an influence with the government again.

            [link]      
            • By Forrest on June 9, 2015 at 7:30 am

              It is a big reason to not knee jerk to demand the politicians regulate our economy to death. Most regulations are inefficient, costly, and crudely effective. Do you think meat processors get rich by poisoning customers? What would be the fallout upon a business that was prosecuted for dumping hazardous waste? You do know the cost to clean up and PR nightmare is more effective force than gov’t regs. Can meat inspectors check every piece? Wouldn’t sunshine be better, meaning good consumer info? It was a good reg to require tracking of food supply. Common sense simple regs have value.
              The banking regs are a joke. Think about the politicians competence upon the subject and that they mainly have a need to merely look good to public. It’s a horrible way promulgate law. After the collapse, the experts attempting to sway politicians to give up some power and allow a team of professional whom were well respected within Wall street and a demonstrated life off high moral character to attempt their last great contribution upon their retirement years to write common sense regulations, law, and controls to make these financial institutions run with maximum sunshine and consumer confidence. Politicians chose the path to gain form themselves more power and awards per politics. They can easily beat up the “rich” and make excuses all the while with hand out for money with accompanying threats of every more regs unless they pay up.

              [link]      
            • By Lorcan Bonda on June 9, 2015 at 10:01 am

              Since the Reagan administration, we have had a knee jerk reaction against regulation. Companies always say the same thing as you did, but they almost always take a short term approach to earnings. Alan Greenspan, Larry Summers, Robert Rubin, and all of the rest of “the smartest guys in the room” made that very same argument for banking deregulation —

              “Citigroup’s co-chairs Sandy Weill and John Reed led a swarm of industry executives and lobbyists who trammeled the halls of Congress to make sure a deal was cut. But as the deal-making on the bill moved into its final phase in Fall 1999, fears ran high that the entire exercise would collapse. (Reed now says repeal of Glass-Steagall was a mistake.)

              “Robert Rubin stepped into the breach. Having recently stepped aside as Treasury Secretary, Rubin was at the time negotiating the terms of his next job as an executive without portfolio at Citigroup. But this was not public knowledge at the time. Deploying the credibility built up as part of what the media had labeled “The Committee to Save the World” (Rubin, Fed Chair Alan Greenspan and then-Deputy Treasury Secretary Lawrence Summers, so named for their interventions in addressing the Asian financial crisis in 1997), Rubin helped broker the final deal.

              “The Financial Services Modernization Act, also known as the
              Gramm-Leach-Bliley Act of 1999, formally repealed Glass-Steagall. Among a long list of deregulatory moves large and small over the last two decades, Gramm-Leach-Bliley was the signal piece of financial deregulation.

              “The result? Casino fever took over commercial banking industry. Weissman quotes Roosevelt Institute Braintruster and Nobel Prize-winner Joseph Stiglitz: “‘Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people’s money very conservatively…It is with this understanding that the government agrees to pick up the tab should they fail. Investment banks, on the other hand, have traditionally managed rich people’s money — people who can take bigger risks in order to get bigger returns.”

              Now we have a much better picture of the financial crisis and it is very clear that banks have no ability for self-regulation.

              “But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.

              “Those of us who have looked to the self-interest of lending
              institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.”

              Unfettered Capitalism does not work — more importantly, it has never worked. The government has experts who have the knowledge to regulate banks. It is part of their charter. The problem has not been lack of ability, but an incestuous relationship between regulators and banks — the regulators are busy auditioning for their next, high-paying job.

              “Federal Reserve has responsibility for supervising and regulating the following segments of the banking industry to ensure safe and sound banking practices and compliance with banking laws”

              [link]      
            • By Forrest on June 9, 2015 at 4:44 pm

              You make a good case that regulations don’t work per the normal political environment. I’ve heard many experts claim Glass-Steagall a mistake to lose, but both sides of the aisle now love regulating banking and investment sector per power and wealth and won’t give it up.
              Gov’t could be utilized for good if ever public could put down their partisan politics of self interest and elect selfless honest brokers of power. A majority that would pass not always popular laws, but non the less affect citizens for good. Term limits has helped Michigan, but you wouldn’t know it from all the complaining from those whom lose power and income.
              This modern invention of administrative law is an abomination to free republic. Unelected agencies operating as lawmakers. The financial institutions need a whole bunch of standardization. Their new inventions or products need to be approved and reviewed for stability, sunshine, and consumer value before practice. The entire sector should be standardized, simplified, and operated within complete clarity. No goofy trading, computer hookups, VIP patrons, undisclosed costs, obfuscation of data/facts. If an 8th grader is confused it’s to complicated. Now, that would drain the swamp of Wall Street wealth and the condemnation would be severe from those losing out, but politicians should do this per benefit of average citizens. Wall street may go to London, but the average investor would soon desire the benefits of this low cost system. Good governance should always break the status quo and shake up those in easy chair. We need to invent better ways, simpler ways, and more cost effective ways for the average citizen to conform to law, enjoy life, and earn an honest income. Currently the regulations industry is ballooning with only government and political benefactors. Pareto principle wherein only 20% of controls typically effective is usually accurate.

              [link]      
            • By Lorcan Bonda on June 9, 2015 at 5:12 pm

              That’s bogus — the only regulation for banks is Dodd-Frank and it is effectively toothless — enforcement provisions were removed. We will have another banking crisis. It will probably be a little slower to form, but there is nothing stopping it.

              I’m all for standardizing and simplifying — the bureaucracy is too immense, but we need to have oversight and regulation. This idea that large corporations are “self-regulating” has always been wrong.

              Here you are arguing against regulation, but then you write, “No goofy trading, computer hookups, VIP patrons, undisclosed costs,
              obfuscation of data/facts. If an 8th grader is confused it’s too
              complicated.” — Who will enforce that standard? Regulators?

              Complication is part of the deal. The internet was supposed to simplify price-shopping. However, have you noticed how difficult it has become to price compare? Have you tried to buy an airline ticket lately? Companies complicated their pricing structure to confuse the consumer and make it take longer to price shop. There have been a plethora of fees and nuisance costs to make it easier to advertise a low price which the consumer will never see.

              Those sorts of pricing structures are the same thing you are complaining about with trading.

              [link]      
            • By Forrest on June 10, 2015 at 7:18 am

              Again you make a good case on why regulations are normally effectless. Financial regs have a poor track record as the regs can not keep up with changing environment. They are fossilized. Just a new requirement to work around. You suppose the regs just not tough enough. The regs too weak and that best is to double down and utilize Gestapo enforcement just the juice to make the brilliance of central control shine. Yes, the consumer info, standardization, simplifying, and sunlight the real crux. Not the lack of burdensome regs. Our education system is maligned with indoctrination of good government and bad business. History lessons and literature are full of propaganda as well as government benefactors and Union group think. We utilize government per outdated classic roles and control. It’s not reinvented to off load responsibilities per less intrusive ways and methods, especially per normal marketplace influence as that would take to much work and risk. Politicians play nice and utilize old school partisan emotions and hold up corp wealth or wealthy citizens to gain power and excite constituency. If ever a 3rd party comes to rescue i.e. Tea Party, the true blue partisans from both parties will explode in anger as they risk losing power. Actually, both parties cooperate much more than reported. Notice how politicians always except themselves from their self proclaimed better laws, i.e. public education, health care, social security, liabilities.

              [link]      
  4. By FactsSaveLives on June 13, 2015 at 1:00 pm

    Good to know the Koch brothers and the Rockefellers actually don’t own anything.

    [link]      
Register or log in now to save your comments and get priority moderation!