The Incredible Gasoline Trade

Why aren't people driving less? What is it about the price of gasoline that doesn't turn anyone off? Why is the demand so incredible?

We are all focused on the supply side and the lack of gasoline. We all know that the refinery situation is just awful. If you are wondering whether it is all NIMBY, check out the great story about Exxon (XOM - commentary - Cramer's Take) in today's BusinessWeek. These guys don't want to build refineries.

The outages are all crimping supply, too. Not to mention the fixation on ethanol and how hard that product is to make and come to the pump.

But what makes the trade -- and the hedge funds are all doing the trade to the long side -- so incredible is that we have seen no cutbacks in use, no matter what. We haven't even seen a big dropoff in buying energy-inefficient cars.

I believe that gasoline is peaking, something no one else believes because it is only May, summer driving season, no capacity. But my theory was -- and is -- that there is some price at which the consumer will cut back on driving. If I am wrong, then the retail move we are seeing right now will be short-lived.

Fortunately, I figure, some of these Federal Reserve people drive, and they might understand that, at a certain point, there is an impact.

It sure hasn't happened yet, which is really the big conundrum out there right now.

At the time of publication, Cramer had no positions in the stocks mentioned.

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. Click here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click here to order his book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.

TheStreet.com has a revenue-sharing relationship with Traders' Library under which it receives a portion of the revenue from Traders' Library purchases by customers directed there from TheStreet.com.