API: Four state pension funds' oil and gas holdings did well

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Apr. 25--Oil and natural gas holdings in four states’ pension funds outperformed other investments during 2005-09, a study commissioned by the American Petroleum Institute concluded.

Preliminary findings by Sonecon LLC found that oil and gas stocks made up an average 3.9% of total public pension holdings in Michigan, Missouri, Ohio, and Pennsylvania, yet they accounted for an average 8.6% of total returns.

The impact was even greater in the states’ two largest public pension funds: the fund for public teachers and other school employees and the fund for state government employees, API and Sonecon officials said during an Apr. 25 teleconference.

They said that oil and gas holdings made up an average 4% of these funds but contributed an average 10.4% to the funds’ total gains during the 5-year period. Returns on oil and gas assets in these state funds averaged 46.5%, compared with 13% for all other assets, according to the Washington economic advisory firm’s preliminary findings.

Sonecon plans to issue a report covering oil and gas investments in 17 states’ public pension funds this summer.

“During vigorous expansion or deep recession, oil and gas investments outperformed other public pension holdings by more than two times,” said Kyle Isakower, API vice president of regulatory and economic policy.

Robert J. Shapiro, Sonecon’s chairman and co-founder, said the four states’ pension funds had $300 billion of aggregate assets in the 2005-09 period. Oil and gas holdings in each state’s fund represented 3.3-4.8% of the total and $1.1-6 billion of assets.

The study did not differentiate between majors and independents. Shapiro said the study’s conclusions might have included overseas multinational oil companies trading on US exchanges with US firms.

Contact Nick Snow at nicks@pennwell.com

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