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When I arrived at the office and started reading the morning news on Tuesday, I had to laugh at one of the headlines.  This is the headline as it appeared on Briefing.com:

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US Oil ETF follows the price of West Texas Intermediate (WTI) crude.
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Tuesday, 17 June 2008
By Andrew Gordon
Take a look at the brown line below. It’s the United States Oil ETF which follows the price of West Texas Intermediate (WTI) crude. On the Friday before last – June 6th – oil spiked.  It opened at $130.75. It hit a high of $138.80 before giving up 26 cents and closing at $138.54.
The big oil companies, including the ones shown below – ExxonMobil, Royal Dutch Shell, British Petroleum and Chevron – did not go up with the oil spike. Instead they went down with the market (the S&P 500 is the light green line below). What else can we see from this chart?

The New Year kicked off with everything going down.

Oil prices began taking off in February. Not so for the big oil companies or the S&P.

Eventually, oil stocks began to recover. By May, they were in positive territory.

Since the beginning of the year, the price of oil has risen over 40 percent. During that time BP, ExxonMobil and Royal Dutch Shell dropped in value. They’ve done no better or no worse than the overall market.

Chevron is an exception and there are others. But the surge in oil prices hasn’t been the bonanza for “Big Oil” shareholders that you might have expected.

Now, with prices this high, demand destruction is beginning to set in. As my colleague, Charles Delvalle noted last Friday, people are driving much less this summer.


High oil prices may not have fueled share prices of the big oil companies. But they are providing a huge opening for other energy sources. Don’t forget nuclear. The sector is off the radar of investors, but nuclear’s rebirth is only a matter or time.
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