WisBusiness: State pension fund posts big gains from oil stocks

By Brian E. Clark

At the same time as Gov. Jim Doyle has railed against what he has called the “excessive” profits of major oil companies, Badger State retirees with holdings in the state’s pension fund have done well by those same firms’ success.

All totaled, gains from oil company stocks in the fund amount to nearly $400 million over the past four years.

A spokesman for Doyle, who has proposed taxing big oil, said the governor isn’t bothered by SWIB’s investments in those stocks.

According to the State of Wisconsin Investment Board, cash earnings from the portfolios of five major oil companies managed by SWIB staff and external managers totaled nearly $207 million from January 2003 to March 2007. Those firms are BP Amoco, Chevron Texaco, ConocoPhillips, ExxonMobil and Shell.

During the same period, the value of the state pension fund rose from $51 billion to $85 billion, SWIB officials said.

In the last two years, oil company portfolios controlled by external managers saw cash gains of nearly $50 million. Those stocks were invested in Chevron, ConocoPhillips, ExxonMobil, Royal Dutch Shell and BP. (Figures from 2003 to 2005 were not available.)

And as of April 2, SWIB’s accounting records also show unrealized gains (which have not been cashed out) of more than $134 million in both internally and externally managed oil company portfolios. In addition, SWIB has numerous commingled funds, some of which have investments in oil companies. (Some of those holdings go back even further than 2003, officials said.)

Matt Canter, a spokesman for Doyle, said the governor isn’t upset by SWIB’s gains from oil stocks.

“Absolutely not,” Canter said. “SWIB has a fiduciary responsibility to its investors and they have to fulfill that responsibility.”

Canter said the governor isn’t opposed to any company making what he called a “good profit and then investors reaping the benefits of that success.

“But the big oil companies have been making profits in excess in anything we have ever seen. And at the same time, regular Wisconsin families are struggling to pay rising prices at pump.”

Canter said the governor believes it’s only fair for oil companies to be taxed to raise money to pay for the state’s roads. Doyle’s proposal would raise around $270 million over the biennium.

Shell Oil Co. President John Hofmeister has called Doyle’s proposed oil surcharge “corporate discrimination.” His company reported a $25.4 billion profit last year.

Other critics of Doyle’s plan have said the surcharge will only be passed on to consumers, though the governor said the law he is proposing would not allow oil companies to do that.