Oil Stocks Too Cheap to Ignore

The oil bears came out of the woodwork yesterday. You know them. They are the ones that talk about how oil is way too high because of speculation. Or the ones who say discrete events -- Nigerian terrorism, Turkish warmongering, Venezuelan saber-rattling, Russian intransigence, Canadian taxes, Mexican outages -- are the causes of every spike. As if the commodity goes down after the resolution of these one-off events.

These people need to rethink their logic. They are also the same people, by the way, who think that oil is plentiful and available, you just have to drill for it.

Believe me, we are going to the far ends of the earth to drill, and there still isn't any. Remember the big find in the Gulf that Chevron (CVX - commentary - Cramer's Take) and Devon (DVN - commentary - Cramer's Take) are sitting on? That was the last big find! And we won't tap into that for a couple of years.

I want to emphasize that these oil companies aren't just returning capital to their shareholders because they are pro-shareholder. The properties that are left out there either aren't worth drilling or are being taxed or expropriated at a pace that makes investment plain silly. The only company that I believe is really spending good time and money trying to find properties of great merit is Apache (APA - commentary - Cramer's Take). And it has to go to strange areas of Australia to find it.

I believe that anyone who is on these conference calls and has read commentary by RealMoney contributor Chris Edmonds knows that the reason oil is where it is has to do with the inability to produce more oil. Otherwise you would see companies and countries rushing to lock in or at least produce at this price to take the so-called "one-time only" gains that the bears think they can get.

Do I think oil can go down? Anything can go down. Do I believe that alternatives can be developed at $100 that could make a difference? Absolutely not. Go listen to that ConocoPhillips (COP - commentary - Cramer's Take) call when ethanol is mentioned. For all of the ridiculous ballyhoo about that fuel, Conoco spends a second or two dispatching it as irrelevant because of its small contribution to oil. It sounds like, right now, it is a negative to produce, meaning it is a tax on the system not a bonus.

Sure, oil sands. Sure, tight sands. Sure, nuclear. Sure, clean coal.

They will keep oil from going to $200 a barrel for certain.

But the fact that Goldman downgraded the group, to me, is a great reason to buy the complex, one that you wouldn't get otherwise, going into the winter.

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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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