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  • How Oil Profits Are Good for Americans

    You could substitute a newspaper article from June 2008 with today’s gas price stories, and no one would know the difference. The story is the same: politicians blaming speculators and big oil while ignoring supply and demand issues and the impact of a weak dollar on oil prices.

    It’s been easy for politicians to point the finger of blame at oil companies since the Gulf spill—although a large majority of Americans support offshore drilling. When politicians attack big oil, it’s important to remember who owns these companies and where that money goes.

    Mutual funds and other firms hold almost 30 percent of oil stocks. Pension funds hold 27 percent; individual investors hold 23 percent; 14 percent is held in Individual Retirement Accounts; other institutional investments hold 5 percent; and corporate management holds 1.5 percent. That’s right: corporate management holds just 1.5 percent.

    Oil and gas shares—benefitting all of those retirees and individual investors—are doing quite well. Kyle Isakower, vice president of regulatory and economic policy at the American Petroleum Institute, writes:

    Twenty-seven percent of America’s oil and natural gas company shares are held by pension funds, and those holdings are providing a significantly larger return than other assets in state pension plans in Michigan, Missouri, Ohio and Pennsylvania, according to a new study conducted by Robert Shapiro, chairman of the economic advisory firm Sonecon and former Undersecretary of Commerce for President Bill Clinton.

    While oil and natural gas stocks made up 3.1 to 5 percent of public pension holdings in the four states studied, they accounted for up to 11.6 percent of the returns from 2005 to 2008. The impact is even greater when looking at the two largest public pension funds in each state, covering public school employees and state government workers. Oil and natural gas holdings made up 3.3 to 4.8 percent of these funds but contributed as much as 12.2 percent to the funds’ total gains from 2005 to 2009. In comparing the performance of oil and natural gas companies against all other assets within these two largest funds, oil and natural gas returned, at a minimum, nearly three times that of all other assets (2.9x to 4.4x).

    Increasing the supply of oil can help offset rising demand, and it can be a huge boon for the American economy. Along with the increased production, jobs, and royalty revenue coming into the government, it can help boost stocks, mutual funds, IRAs, and pension funds owned by millions of Americans.

    Posted in Energy [slideshow_deploy]

    10 Responses to How Oil Profits Are Good for Americans

    1. George Colgrove VA says:

      Oil profits – yes!

      Any other profits from other sectors added to those profits – even better!

      Profit is good – public workers should do what they could to make profits even higher!

      Taxes are based on profit! Their pay is based on taxes!

    2. Bobbie says:

      Those in authority or ones in position we're obligated to trust, need to be held accountable for mixing truth with lies.

      It doesn't have to be this way and if the President was honest and serving the interests and needs of the people, he'd of taken reputable advice that grows the economy all along, but his unwillingness builds deeper concern.

    3. Florida says:

      Do you know what would be good for Americans? Keeping ALL of the oil we produce in the United States here in the United States and not selling it as part of the World Commodity market. These are our natural resources. Our oil, in every form, belongs to all Americans. I have read that we have more oil than the middle east. Imagine the price of everything going down because we produced our own crude. We could set the price of our economic prosperity, not the petty dictators in dresses and towels on their heads. We could determine our own financial future.

      1/3 of profits to the oil company that extracts, refines, and retails the product, 1/3 of the profits to the state in which it is sold, and 1/3 of the profits to the federal government because we will have to pay off the mob in DC. Set the price at $2.40 per gallon and this will be more money either of these three entities has ever received from the sale of fuel.

      We would keep our energy money here in the USA and we will be able to afford the R&D required to create non fossil fuel energy sources. It is so simple I feel stupid just thinking that our government has not already started doing this. Any president who finally follows through with the promise of making the USA energy independent will go down in history as one of our very best leaders.

      Drill Here, Drill Now, and Keep it Here!!! ww.freewethepeople.com has a good section on the website about all this.

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    5. Tom Georgia says:

      Furthermore, with just a cursory examination of the SEC 10k filings that are submitted by the major oil companies you can see that the amounts they are paying aggregate in all taxes of all kinds is roughly 3 times as much as the amount they are retaining in after-tax profits.

      And, by the way, that 3X amount excludes all of the taxes of all kinds: income taxes, payroll taxes, personal and household taxes, etc., that are being paid using money from employees salaries which are, in turn, paid using money from the companies' gross revenue stream.

      Of each dollar paid at the pump by consumers, about 60 to 65 cents is paying for cost-of-governments that is embedded in the pump price.

      Now, whine louder, whiners. It is your overgrown, overly burdensome governments who are taking the financial wrecking ball to your lives. The oil industry is being screwed over by our governments just as thoroughly as all of the rest of us.

      Governments are cleptoparasitic institutions who must have a value producing host population from whom essentials can be pilfered if the cleptos are to survive. We are it.

    6. MrShorty, Cave Creek says:

      The rise in gasoline prices here in the US is 100% due to the stupidity of our government officials and the even greater stupidity of the people who believe that the government is doing the right thing. I have yet to meet a progressive who can clearly illustrate what the US will look like if the current trend continues and government gains all the power the progressives want it to have. Their arguments start to quickly unravel after they have "stolen" most of the wealth of our citizens and the people who get the "free" ride don't have any more tomorrow than they have today. They all get their free medical care and free food, but they forget that the lines are much longer since everyone will be taking advantage of that and there won't be any food on the shelves and they will have to wait days to see a doctor to check out their ingrown toenail.

      Communism runs contrary to human nature and as such, it can never succeed. The only logical outcome of communism is tyranny…just were the world was 300 years ago.

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    8. Pingback: Who Benefits From Soaring Gas Prices?

    9. M E Murphy Wichita,K says:

      Why do we never hear so-called president/the mainstream media /politicians,etc.

      praise the oil companies for the BILLIONS of taxes they pay?

      The 2008 report of taxes paid by Exxon-Mobil;

      $36.5 Billion in income taxes

      $34.5 Billion in sales taxes

      $45 Billion in other taxes

      for a total of $116.2 BILLION in taxes paid in 2008!!!!

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