The American Petroleum Institute has just issued a report by Sonecon titled “The Financial Contribution of Oil and Natural Gas Company Investments to Major Public Pension Plans in Four States, 2005-2009.” This analysis was an extension of earlier work by the same authors (Robert J. Shapiro and Nam D. Pham) from 2007 which found that oil and natural gas investments were widely held by individual Americans in personal portfolios, mutual funds, pensions, and retirement accounts.  At a time when petroleum prices are rising and energy company profits are being scrutinized for political purposes, these studies remind us that – whether we realize it or not – most of us are investors in these firms.

This study takes that concept a bit further, perhaps explaining why these stocks are so commonly held.  According to the Executive Summary, “From 2005 to 2009, spanning both vigorous expansion and deep recession, the share of the [public pension plan] funds’ returns attributable to oil and natural gas investments was 2.5 times to 2.8 times greater than their share of those funds’ assets.”

The authors specifically looked at the public pension plans in four states: Michigan, Missouri, Ohio, and Pennsylvania.  In layman’s terms, those of us who are investors in these companies are getting a good return for our dollar.  While oil and natural gas’s share of the portfolio in these plans averages 3.9 percent, they account for an average of 8.6 percent of the overall return over that period.

Overall, this is an interesting analysis and worthy reading, especially in the current political climate.

Chad Moutray is chief economist of the National Association of Manufacturers.