HOUSTON – Wealthy investors in Houston park nearly a quarter of their cash in the energy industry, and most bet heavily on fossil fuels, a new survey shows.
Ninety percent of the city’s millionaires owned a stake in oil and gas companies or funds, according to a Morgan Stanley survey released Wednesday.
Few of the same investors showed any affection for clean energy sources like wind and solar power. About 15 percent of the surveyed group owned wind and solar energy stocks and funds, and almost three-quarters of the city’s investors say they have no plans to back clean energy.
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Millionaires living in the global energy capital defied national attitudes about investing. While most U.S. investors believe technology is the best place to plant a seed, energy handily beat every other industry among Houston’s wealthy, according to Morgan Stanley, which surveyed 300 local investors and 1,000 across the U.S.
It’s no surprise that energy dominates in the energy capital of the world, said Matt Kabot, managing director at Morgan Stanley in Houst0n, in an interview Wednesday.
But since the late 1980s, when tanking oil prices crushed the local economy — and everything from community banks to the real estate industry suffered for years — Houston has branched out in other industries, especially in health care.
That may explain why 61 percent of Houston investors believe biotechnology and pharmaceuticals are top investment sectors, Kabot said.
Buying familiar stocks
But oil and gas still dominates.
It’s much the same in many other parts of the country where industries are highly concentrated. People who live in Atlanta own Coke and Home Depot. In the Silicon Valley, technology giants are the local flavor. In Houston, it’s hard to find a person who isn’t at least related to someone who works in the oil and gas business, said Andrew Gardener, president of Tanglewood Legacy Advisors in Houston.
“People are buying things that at least they think they know,” Gardener said. “If 90 percent of your net worth is tied to the price of oil and gas, then it definitely makes sense to diversify.”
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But Houston’s wealthy investors may be more connected to wind, solar and geothermal power sources than they realize: Integrated oil companies like Shell and Chevron are among the biggest investors in clean energy.
“They’re hedging their bets,” Gardener said.
Bullish on Houston
Morgan Stanley also found that Houston investors are more bullish about the local and state economy than their counterparts across the country. But they were more concerned about the national economy and overseas prospects than the average U.S. investor.
- Seventy-seven percent of Houston’s high-net-worth investors regarded energy as a top investment, compared to 66 percent nationally. Twenty percent of those investors own a stake in a Texas-based energy company.
- After energy, 65 percent of that group believe technology is one of the best places to pump money.
- About 17 percent of Houston investors own a stake in wind energy. Slightly fewer invest in solar (16 percent) or coal (15 percent). About 9 percent have geothermal investments and just 4 percent invest in electric vehicles.
Also on FuelFix:
Eight energy leaders rank among Forbes Most Powerful People
Alexei Nikolsky / Associated Press
No. 60 -- Rosneft Chairman Igor Sechin, 53
Sechin, President Vladimir Putin's former deputy chief of staff, took the helm at Rosneft in May 2012 and soon after lead a major deal to buy BP's interest in energy company TNK-BP.
[Photo: CEO of state-controlled Russian oil company Rosneft Igor Sechin commissions new equipment at the Rosneft oil refinery in the Black Sea port of Tuapse, southern Russia, Friday, Oct. 11, 2013.]
MLADEN ANTONOV / AFP/Getty Images
No. 40 -- Saudi Arabia Oil Minister Ali Al-Naimi, 78
Ranked No. 32 last year, Al-Naimi, Saudi Arabia’s minister of petroleum and mineral resources, also served as president of Saudi Aramco, the world's largest oil company, for many years.
[Photo: Saudi Arabian Minister of Petroleum and Mineral Resources Ali Ibrahim al-Naimi speaks at The Center for Strategic and International Studies (CSIS) in Washington DC on April 30, 2013.]
Rafiq Maqbool / Associated Press
No. 38 -- Reliance Industries Chairman Mukesh Ambani, 56
Ranked No. 37 in 2012, Ambani is India's richest man, overseeing the $50 billion petrochemical conglomerate Reliance Industries.
[Photo: India's Reliance Industries chairman Mukesh Ambani (right) and his wife Nita pose for photographs as they arrive for the company's annual general meeting in Mumbai, India, Thursday, June 7, 2012.]
KAMRAN JEBREILI / AP
No. 34 -- United Arab Emirates President Khalifa bin Zayed Al-Nahyan
Ranked No. 33 in 2012, President Khalifa bin Zayed Al Nahyan leads a small nation with massive oil reserves, the seventh largest in the world.
[Photo: UAE President Khalifa bin Zayed Al Nahyan watches the opening ceremony of the International Defense Exhibition in Abu Dhabi, United Arab Emirates on March 18, 2001.]
BO RADER / McClatchy-Tribune News Service
No. 31 -- Koch Industries CEO Charles Koch, 77
Ranked No. 41 last year, Charles Koch is one half of the brother duo that leads the nation's second largest private company, Koch Industries, which includes refining and chemicals businesses among its interests.
[Photo: Charles Koch speaks during an interview in May 2012 in his office at Koch Industries in Wichita, Kansas, where Koch Industries manages 60,000 employees in 60 countries.]
Mark Lennihan / Associated Press
No. 31 -- Koch Industries Executive Vice President David Koch, 73
Ranked No. 41 last year, David Koch is one half of the brother duo that leads the nation's second largest private company, Koch Industries, which includes refining and chemicals businesses among its interests.
[Photo: David Koch, executive vice president of Koch Industries, attends a meeting of the Economic Club of New York.]
Joshua Roberts / Bloomberg
No. 16 -- Exxon Mobil CEO Rex Tillerson, 61
Ranked No. 22 in 2012, Tillerson led Exxon Mobil to $44.9 billion in profits last year.
[Photo: Rex Tillerson, chairman and chief executive officer of Exxon Mobil Corp., listens to Takeshi Uchiyamada, chairman of Toyota Motor Corp., speak to the Economic Club of Washington in Washington, D.C., U.S. on Monday, Sept. 30, 2013.]
Hassan Ammar / Associated Press
No. 8 -- King of Saudi Arabia Abdullah bin Abdul Aziz Al Saud, 89
Ranked No. 7 last year, Abdullah bin Abdul Aziz Al Saud rules over about 20 percent of the world's oil reserves.
[Photo: King Abdullah bin Abdul Aziz al-Saud of Saudi Arabia waves to members of the Saudi Shura Council in Riyadh, Saudi Arabia.]