Oil prices may be down, but 2008 could still be a good year for Big Oil stocks.
Even though oil prices are down, and 2007 saw a pretty good boost to Big Oil stocks, CNN Money analysts feel that there is still room for growth:
It's not too late for investors to get in on the oil boom in 2008, analysts say, even with the near 30 percent runup in oil company stocks last year … Experts generally expect nearly all oil stock sectors to do well in 2008 – although not as well as in 2007.
Oil prices are dropping, thanks in large part to some careful complaining by President Bush, but that doesn't mean oil stocks are in trouble. To the contrary. Even though they are struggling a bit right now, between increasing demand from around the world (especially China) and here in the U.S., as well as continued tax breaks and subsidies, Big Oil is likely to continue to grow. Even BP (BP), which CNN Money reports has been in the "penalty box" for the last five years, is experiencing overall growth and increases in stock price.
The Big Oil stocks mentioned by the article includes all the "safe haven" big boys: Exxon (XOM), Chevron (CVX) and ConocoPhillips (COP). Indeed, it is fairly likely that Big Oil companies will plug along much as they always have, no matter what oil prices do. The only thing that could stymie Big Oil is a radical change in how Americans (and others) view oil as a main source of energy. And that day is so far in the future that it is barely visible.
This presents a problem for many investors with environmentally friendly leanings. Exxon is notorious for disregarding environmental concerns. However, CVX and BP are both investing in some new technologies, even if the funding they provide is a rather small drop in the bucket. The Panelist founder Dave Neubert has mentioned Statoil (STO) in the past because it has potential — and because it is trying to be carbon neutral.
Oil stocks, and the oil services sector in general, are likely to do well this year on Wall Street. Only you can decide how that fits into your own investing plans.
Disclosure: I do not invest in any of the stocks listed above. I do not even buy gas from Exxon. I am considering STO.