How do oil and natural gas stocks affect my retirement?
Contrary to popular belief, America’s oil and natural gas companies aren’t owned by a small group of insiders. 97.2 percent are owned by regular Americans, many of them middle class, such as teachers, police officers and firefighters.
That means there is a good chance that you are actually an owner of a U.S. energy company, which is good news for you—the assets invested in oil and natural gas consistently outperform the rest of an invested portfolio, fueling Americans’ retirement security.
A strong oil and natural gas industry is a vital part of the retirement security for millions of Americans. A 2011 analysis by the Sonecon advisory firm found that state pension fund investments in oil and natural gas companies are providing strong returns middle class Americans. Returns on oil and natural gas assets in the top two state funds in 27 states averaged 42 cents for each dollar invested, compared to just 6 cents for other assets in these funds from 2005 through 2009.
The oil and natural gas industry is a major contributor to the health of these funds, many of which face huge future payout obligations. Investments in the industry accounted for 4.6 percent of the average fund’s total assets while producing 15.7 percent of total returns — a ratio of 3.4 to 1.
Furthermore, analysis of API's compilation of public data, independent research and corporate annual reports found that the industry paid out approximately $35 billion in dividends distributed to American shareholders in 2010 alone.
Policy proposals can give the impression that if only a few rich companies or executives would pay more, the rest of America would have to pay less, or even nothing at all. The reality is far different. The owners of America's oil and natural gas companies are largely retirees or middle-class Americans saving for retirement. The cost of higher taxes on this industry would be borne largely by them, not by CEOs.