Why Oil's Still the Place to Be

Worry about something else other than the chance that the Federal Reserve won't cut its short-term interest rate target. Worry about how little oil is out there to find, how we are running out of cheap natural gas and how China is the linchpin in oil usage, not us.

Those are some of the trepidations that I feel after reading the incredibly good speech by Schulmberger (SLB - commentary - Cramer's Take) chief Andrew Gould earlier this month, available on the company's fantastic Web site.

Gould's dealing with the realities of why the Oil Service HOLDRs (OIH - commentary - Cramer's Take) won't quit. Easy oil is indeed running out, despite what the bulls tell us. The new additions to old fields give out earlier. The kind of oil and natural gas that is still left to find in North America is low-quality and not deeply reserved. The places where oil can be found are all deepwater or remote.

Just the kind of business that a Schlumberger or a Transocean (RIG - commentary - Cramer's Take) can get you but a Nabors (NBR - commentary - Cramer's Take) can't. No wonder the charts are so different.

Worse, the national companies hardly spend on exploration and production, and the amount of money that has been spent by the major private oil companies is actually not even keeping up with inflation. That confirms my long-term fears that the major oil companies are just betting on lower prices in the out years, something that can't be true given how wrong the forecasts have been.

While he doesn't mean to, Gould also makes a fabulous case for plays like FMC Technologies (FTI - commentary - Cramer's Take) and Core Labs (CLB - commentary - Cramer's Take) because the technology to get more oil out of old fields is the best thing going right now.

Go read the letter. You won't sell any oil-service companies after you read it, and you will be looking for the Fed to do the wrong thing next week so you can buy them.

Random musings: You have to read Cliff Mason's debt collection piece, you just have to. It is a sidesplitting drift down reality's shyster road.

At the time of publication, Cramer was long Transocean.

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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.

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