Oil and Gas Patch Will Keep Working

It's all about the rig count. That's the new measure, and it's astoundingly like the old measure. That's right, in the beginning of the 1980s we used to trade off the rig count. If it was up, we bought Baker Hughes (BHI - commentary - Cramer's Take) and Schlumberger (SLB - commentary - Cramer's Take), and if it was down, we sold 'em.

But all we ever get these days is up. In fact, for the first time in a couple of years Canada is up -- the governments up there taxed the companies so severely that they basically stopped drilling, the opposite of what is needed.

These days the shale business is exploding all over the country and we need rigs -- hence the amazing bidding war for a once-despised property, Grey Wolf (GW - commentary - Cramer's Take), and the endless runs in Nabors (NBR - commentary - Cramer's Take) and Halliburton (HAL - commentary - Cramer's Take), the prime beneficiaries of domestic drilling.

It's no secret that we are in a horrible bear market. Despite being minus 8 on the oscillator -- a sure bounce level historically -- there's nothing working except oil and gas. That is one of the great bull markets out there, and yet it doesn't get talked about much.

When you see this rig count on fire it means that the companies drilling are able to raise numbers pretty significantly, and that will matter greatly in the end when the quarters are reporting.

There is always a bull market somewhere, and this one is defined by the rig count, something that I haven't thought of in 25 years.

We have so many misstatements going on about oil -- speculators, federal government intransigence, no offshore drilling, the endless sense that discrete issues like Iran-Israel or Nigeria are really driving up prices. The truth is that demand is driving up prices, and the only place where supply is rising to meet demand is in natural gas -- the coal bottleneck is huge because of a lack of drilling equipment from Joy (JOYG - commentary - Cramer's Take) and Bucyrus, the remaining players in what was once a robust industry.

Because prices are being driven up by oil, natural gas' gross margins are booming, and so are the finds. The finds can very quickly be put into the system by the pipelines of Williams (WMB - commentary - Cramer's Take) and El Paso (EP - commentary - Cramer's Take) and Spectra (SE - commentary - Cramer's Take).

The bull market in this group continues to be ignored because traders are resigned that this market, too, must falter.

I just don't see it that way and will continue to search the patch for more names and more winners. They abound there.

At the time of publication, Cramer was long El Paso.

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