Posted by Mike Smith :: June 17, 2008 @ 8:38 am

The outrage over rising gasoline prices often pales in comparison to that which occurs when oil companies report their profits. Despite analysis showing that oil companies have lower profit margins than companies in many other industries, reporting large profits when consumers are feeling the crunch of high prices generates a lot of negativity. One potential upside to large profits by the oil companies is that it probably boosts your investment or retirement portfolio.

Contrary to popular belief, the majority of owners of natural gas and oil companies are

"middle-class U.S. households with mutual fund investments, pension accounts, other personal retirement accounts, and small personal portfolios."

This information is part of a September 2007 study by SONECON, which tried to determine the distribution of ownership of U.S. oil and natural gas companies.

The study found that for shares in these companies:

• 42.7% percent are owned or held by mutual funds and other asset management companies that have mutual funds
• 27% are owned by pension funds
• 14% are held in IRA accounts
• 1.5% are held by corporate management, i.e., oil company insiders

So before complaining about the greedy owners of oil companies, remember that if you are one of the 100 million U.S. households with a mutual fund, IRA, or personal retirement account, then you are probably one of those owners yourself. Profits by the oil companies generally benefit their shareholders and will likely cause the value of your retirement accounts to increase.

While you may not get the multi-million-dollar compensation of some oil executives, chances are that you profit from the success of oil companies even if you don’t realize it. Unless you are borrowing money from your accounts or selling shares in non-retirement accounts, you may not see the profit until you finally start receiving retirement benefits. The profits you do see may be counteracted by rising fuel prices but nonetheless are one upside of higher oil profits.