It's really very simple.

Go to any stock comparison chart today and compare the popular United States Oil Fund, Barclay's iPath S&P GSCI Crude Oil Fund, or PowerShares DB Crude Oil Double Long and compare these to The United States 12 Month Oil Fund or PowerShares DB Oil Fund.  You will find that USL and DBO outperform the rest in all long term charts - 3 months, 6 months, 1 year.

That's because of contango, the term used for the strategy of buying the front-month futures contract and rolling it forward, which is what all the major funds have to do in order to try and keep in line with current crude oil future contract trading.

Remember, oil contracts priced in the future are currently more expensive than current prices.  As long as that is the case, when the current month's futures contract expires, these funds are forced to 'roll over' and pay a higher price for the next month's contract.  Who pays for the difference?  The long term investors who don't know any better.  What makes it more extreme (and unusual) is that a major chunk of the futures contract volume is actually driven by the fund that's trying to follow the contract prices.

Did you get that?  It's pretty ridiculous when you think about it: the index supposed to follow current crude oil prices actually drives the current price.

Assuming that all this is true, it is actually the longer term contracts that provide a more meaningful look into the value of oil.  The current contracts go all the way to the year 2017, where traders currently predict that the price of oil will be $74 (that's, of course, laughable to those who believe we are hitting a period of peak oil around the world).

In any case, there are two oil funds that are superior in that they have already proven not to lose as much unnecessary dollars when rolling from one futures contract to the next, and yet they still follow the current price of crude: USL and DBO.

USL buys 12 months worth of contracts and rolls over all of them, which spreads out the contango and minimizes the effect of the price differential roll over between the current month and the next.  DBO, on the other hand, uses management discretion, meaning they can basically buy and do whatever they want depending on what the current futures contract situation looks like.  It has worked so far, as they are preforming in line with USL, suggesting that they are also likely spreading their bets and buying 12 months worth of contracts.

I'm still waiting on a fund that focuses more on late date futures contracts only, but right now USL and DBO are the best available.  In 3 months, 6 months and 1 year, USL and DBO have outperformed OIL and USO by around 10-20%.  That's the price you pay when you buy USO or OIL.