Oil's Tied to Drilling

Nigerian unrest. Yep, that's why oil went up $5 in the last few days. And the dollar, too. That's big. (I know, it's going down today, but it doesn't matter -- buy the stocks on weakness.)

OK, everyone repeat after me: We are running out of supply, and worldwide demand is off the charts.

Does anyone think that National Oil Varco (NOV - commentary - Cramer's Take) goes up 5 points for no reason?

Go read the Transocean (RIG - commentary - Cramer's Take) conference call from Wednesday. It's eye-opening. The premier deepwater driller -- with the best technology and expertise, and most important, clout with the rig builders -- can't get enough rigs for 2011 to equal the demand. The big issue on the RIG call was whether the rigs will be available at the beginning of 2011 and not the end! And when they come, the bidding for them already is so furious that they won't mean anything to the possibility of more oil and gas in the world.

Then go read the Devon (DVN - commentary - Cramer's Take) quarter. The big break in production there is in the heavy oil sands business in Canada. That's the best area they have going. No, we can't drill in our own areas, we go to Canada to find heavy oil. Heaven forbid we open Wyoming to full-time drilling. Or Colorado. Disturbs the habitats of some small animals. ANWR. Or off either coast or off Florida where there are immense fields. Heck, we don't even allow windmills to be built!

This stuff is called "homework." It is what makes you realize that Nigeria is not the issue. It's where oil and gas are -- in hard places to get. In places that are restricted.

Now, go read Owens Corning's (OC - commentary - Cramer's Take) call. It's about insulation and how buildings use a huge amount of energy. It talks about the best kind of energy: the energy we don't use. Yet both buildings and cars are horribly inefficient, and not much is being done about it.

Oil's increase has nothing to do with the dollar or the Nigerians or Iraq or Venezuela. It has to do with the inability to drill what we can get at either because of environment or because of an acute rig shortage.

And neither is showing any more signs of abating than the excessive use of energy to heat things, make product and power cars.

Nigeria?

How about the U.S., our own worst enemy? Or, don't forget the globe itself, which is running out of oil quickly, despite many pundits' best attempts to tell us it's all about the dollar.

Random musings: Dan Dicker has good stuff on this today, too.

At the time of publication, Cramer was long National Oilwell Varco.

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