Institutional shareholders, unmoved by concerns about high gasoline prices and criticism of high oil company profits, believe their patient investing is now paying off.
"It's a prototypical conundrum," said William R. Atwood, executive director of the $11.5 billion Illinois State Board of Investment, Chicago. "You hate the notion of profiting from everyone's misery, but as an institutional investor you have a duty to maximize return."
At the $29 billion Retirement Systems of Alabama, Montgomery, Marc Green, chief investment officer, said, "The companies are doing the right thing. They are increasing dividends … and drilling for new oil." Alabama is overweight in the oil company group in its active portfolios.
Charles M. Elson, law professor at University of Delaware, Newark, and director of its John L. Weinberg Center for Corporate Governance, said, "Oil companies haven't done anything illegitimate or illegal or unethical. They are the beneficiaries of high commodity prices and (at other times) the victims of low commodity prices."
But Denise L. Nappier, Connecticut treasurer and sole trustee of the $23 billion Connecticut Retirement Plans and Trust Funds, said in a statement: "There's no doubt that today's profits are enormous. As long-term investors, our concern is to ensure that today's decisions are not sowing the seeds of tomorrow's demise.
"Oil prices are rising, as demand across the world increases for this finite resource," she added. "The energy resources the world will need this century are very different than those of the last century."