The ownership of oil and natural gas companies may not be what people commonly think it is or expect it to be. The fact is that over 80% of the ownership of oil and gas companies in America is held by private individuals, either in their individual names or through their IRA, mutual fund or pension fund.
Broad Ownership of Public Oil Companies
A report of an investigation by Robert J. Shapiro and Nam D. Pham notes thate oil and gas company officers and managers, the corporate management, own a mere 2.9%. Asset management companies, including mutual funds, own 24.7%. Pension funds control 28.9%. Individual investors, which come in as the third highest portion at 18.7%, control a significant portion of the wealth. Next in line are IRAs, which control 17.9%. Other institutional investors own 6.9% percent.
This data seems to indicate that middle-class households continue to predominate the ownership of publicly-held oil and gas companies. By owning oil and gas company stock, these middle-class investors benefit from the industry’s strong, profitable returns. Stock ownership is providing a sustainable income to these individual investors and retirees.
Ownership Distribution by Industry Segments
The oil industry can be broken up into three segments: integrated (providing a range of functions such as drilling, production, treating, etc.), non-integrated, and services. Of these three categories, integrated companies represent 44.1% of the industry’s market value, or approximately $1.94 trillion in earnings. Non-integrated companies represent 39.8%, and services-related companies represent the remaining 16.1%.
There are twelve publicly-traded, U.S. based, integrated oil and gas companies in the U.S. Once again, the data reveals that corporate insiders, such as executives and directors, have minute ownership shares. These insiders control 0.5% of the integrated companies, whereas private investors own 42.7% of the outstanding shares. Of the 129 domestic publicly-traded non-integrated oil and gas companies, corporate executives own a mere 5.5%, and their ownership has actually declined over recent years. Individual owners account for 18.1% of the ownership. As of May 2014, this segment represents a $772 billion market capitalization. Finally, there are 60 publicly-traded oil and gas service companies, and corporate executives control 3.0% of these companies. Individual investors control 26.9%. The combined market capitalization of these services-related companies is $313.5 billion.
The point is that the critics of the oil industry often characterize oil companies as leviathans and monolithic entities, when the fact is that ordinary individuals, either directly or indirectly, are the owners of a major portion of U.S. oil and gas companies. Oil and gas company income funds the retirement of many older Americans. Of course, this may be another case where the facts are purposely ignored because they don’t further someone’s politically charged narrative!