Exxon Mobil or Chevron: Which is the Better Bet?

The last few years has seen relatively little in the way of Big Oil hype.

During the run up in price of oil, during the 2007 and 2008 timeframe, it seemed like every other financial news article featured Exxon Mobil XOM or another big oil company. In fact, Exxon was the most valuable company in the world at the time. While it seems that the talk of Wall Street has turned to companies like Facebook and Apple, the big oil producers continue to be among the most valuable companies in the world, and occupy no less than three spots among the list of the world’s most valuable companies.

Let's take a look at the two American oil companies on that list, Exxon Mobil and Chevron CVX (the other being Chinese company Petro China).

For its part, Exxon Mobil had an average 2013. The company’s stock began at $88.00 on Jan. 2, 2013 and didn’t do much in the way of upward movement for much of the year, when compared with the market as a whole.

Though the stock did climb up to $95 in late July it was pretty much downhill afterwards – with the stock hitting a low of just $85 on Oct. 9th.

Investors who bought Exxon at this low point were in for a pleasant surprise, as the stock finally achieved some sustained upward momentum – closing 2013 at $101. Those who bought at the yearly low and held the stock through the end of 2013 saw a return of 18 percent -– good, but still well below the market averages (though this would have been an 18 percent return in just 2 ½ months).

Those who had owned Exxon through the entire year saw returns of just 14.7 percent.

A share of Chevron stock cost $110 at the beginning of 2013. Chevron’s 2013 stock chart is reminiscent of the Himalayas, with the stock trading up and down within the $10 range between $117 and $127 for most of the year. Chevron finished the year at just $125 per share – or a per share gain of just $15. This 13.6 percent gain was also far outdone by the market as a whole.

S, why are Exxon and Chevron being outdone by the broader markets? Analysts point to aging oil wells and a dearth of new global oil deposits as reasons for the companies' reduced growth.

Clearly the price of oil, which remains healthy but is nowhere near its 2008 highs, has had an effect as well. Overall it is difficult to determine the future price of oil. Additionally, it is difficult to predict future discoveries of oil. It seems it would be wise for these companies to make large investments in oil alternatives, which could use the backing of such major players in order to make real advances. For now, there does not seem to be much on the horizon which would signal a real change in these big oil companies’ fortunes.