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Coverage of energy that moves beyond polarized arguments and emotional debate to explore the points of tension, the tradeoffs and opportunities, and the very human consequences of energy policy, production, use and innovation.Inside Energy is a collaboration of seven public media outlets in the nation's energy epicenter: Colorado, Wyoming and North Dakota.

How Energy Invested Is Your Retirement? We Looked At One Account To Find Out

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A screencap from the T.Rowe Price website, the usual screen any investor would see when they check their retirement account.

Oil prices are slipping to levels not seen in years. That is bad for oil companies, but it has to be good for consumers, right?

The story is more complicated than that. Nearly all of us with retirement accounts – the tens of millions of Americans with IRAs, 401Ks, 403Bs, or pension funds – are actually solidly invested in oil and gas companies.

Scott Middleton, who works with investment consulting company Innovest, explained that most retirement accounts have a similar percentage invested in the energy sector, between five and 10 percent. Interestingly, "the energy sector" in Wall Street-speak basically means just oil and gas. Overall, oil and gas makes up about 9 percent of the total stock market; other energy sources are a much smaller fraction of the market.

In our example, if we take a look at reporter Dan Boyce's retirement account, a Roth individual retirement account from T. Rowe Price, you'd find about 10 percent of it invested in bonds, and 90 percent in stocks split over 19 different funds. Since each fund is publicly traded, you can look at their filings with the Security and Exchange Commission and learn with portion of the funds are directly invested in oil and gas companies.

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Credit Jordan Wirfs-Brock / Inside Energy
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Inside Energy
By looking at the filings for the 19 individual funds that make up Dan's IRA, we can know what portion of those funds are directly invested in oil and gas companies - anywhere between 0 and 18 percent. That portion is highlighted in orange.

In investigating his portfolio, what we find is a little less than 6 percent of his IRA is in oil and gas, or about $243. Middleton said as oil prices shrink, so too will that $243.

Most importantly, however, reporter Dan Boyce is betting on that IRA for the long-term, so short-term fluctuations in price shouldn't really concern him. Over the long-term, Middleton and others explained, the energy sector has been considered a very safe investment, yielding about a 10 percent annual rate of return.

While declining oil prices might be bad for one part of your portfolio, they're good for other parts.

"Especially the chemical producers, their costs are lower, so they tend to do well," Middleton said, adding transportation companies also benefit.

Ultimately, oil and gas is not a critical part of Boyce's retirement fund. But make no mistake, our retirement funds are absolutely critical for oil and gas.

The American Petroleum Institute said about 70 percent of U.S. oil company worth is owned by tens of millions of U.S. households, through our IRAs, our pensions, and our mutual funds.

Inside Energy is a public media collaboration, based in Colorado, Wyoming and North Dakota, focusing on the energy industry and its impacts.

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