Chevron (CVX 0.66%) is now the largest U.S. oil company by market cap after overtaking big-oil rival ExxonMobil (XOM 0.16%). Chevron closed trading on Wednesday with a $142 billion market cap, eclipsing Exxon's $141.6 billion value. But both have fallen below renewable energy giant NextEra Energy (NEE 1.18%), which has surged to a $145.5 billion market value this year.
While Chevon is now the largest U.S. oil company, it's a fraction of its former self. At its peak in 2014, the company had a $256 billion market cap. Shares have since fallen more than 45% from their high, with most of that damage coming this year as they've declined 39% due to crashing crude prices caused by the coronavirus.
ExxonMobil is also a shell of a once-mighty oil giant. At its peak in 2007, it had a more than $500 billion market cap. It has since shed more than 70% of its value, including cratering 52% this year. Like Chevron, lower oil prices are a major factor.
But oil price volatility is only part of the story. Another significant driver is a shift in investor sentiment away from fossil fuels toward renewable energy. Not only are renewables cleaner, but they're also growing faster due to the rapid decline in costs. That's allowing utilities like NextEra Energy to generate strong earnings growth while oil giants like Exxon and Chevron are seeing their profits erode as crude prices crumble.
That trend will likely become even more pronounced given the chilling demand forecast of fellow big-oil producer BP (BP 0.87%), which estimates that it could have already peaked. That's leading BP to join investors in pivoting toward renewables so that it's not left in the dust.