U.S. gas prices have pulled-back recently -- the average price for regular unleaded gasoline (87 octane) is down about 17 cents to $3.27 per gallon in the past month. But prices are still up about 10 percent since a year ago in December 2010.

What's more, gas prices are up a whopping 27 percent compared to two years ago, in December 2010, when the average price for regular unleaded was about $2.58 per gallon.

Further, you can rage, rage, rage against the high prices at the gas pump -- and it only takes one hic-cup in the Middle East or in some other oil exporting nation to send oil prices rocketing higher still -- or you can do something constructive -- profit from the price rise, by owning shares of promising oil play. And with the aforementioned in mind, Chevron (CVX) is worth a review.

Chevron is the second largest U.S. oil company and a diversified oil star: 28 percent of CVX's revenue stems from exploration and production, 72 percent from refining.

Look for Chevron to post production increases of roughly 2 percent per year in 2011-2014, and then about 5 percent per year in 2015-2017, propelled higher by large-scale projects. The $3.24 annual dividend provides more encouragement.

Chevron has also done a decent job restructuring/streamlining its refinery operations, and has also concentrated on upstream projects with higher-margin outlooks. Chevron also suspended development drilling in the Frade field in Brazil after the company learned about seep lines in the ocean floor.

Chevron's stock traded Monday afternoon down $2.44 to $101.81.

The Thomson Reuters First Call FY2011/FY2012 EPS estimates for CVX are $13.47 to $12.75.

Technical Analysis: Technically, Chevron's stock has registered a volatile 2011. Four times Chevron scraped $110, only to incur drops after each, one of which was larger than $20. Still, the stock found support at $86, with a double-bottom in place, and there is scope to $130 and beyond in 2012.

Stock Category: Chevron is ideal for moderate-risk investors who want an integrated oil play with an adequate dividend and decent prospects for growth. However, expect choppiness with Chevron's stock price, due to the company's exposure to the inherently volatile U.S. gasoline market.

2012 Outlook: I view Chevron as a long-term play, but if you're looking to sell CVX within the year, it's probably best to take your profits after it rises to $116-119, if it fails to clear $120.

Stock Analysis: Chevron Corp is a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 50 percent position in CVX now; under any circumstance, I wouldn't buy more than 75 percent of my CVX position before February 2012. I'd put a sell/stop loss at: $73.

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Disclosure: L.C. Jacobs of New York, N.Y. reviews stocks on a quarterly, semi-annual, and annual basis.

L.C. Jacobs has no positions in stocks reviewed, but does own federal, municipal, and corporate bonds.

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To contact  L.C. Jacobs about this stock review, write to: stockreview@mail.com.

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