NEW YORK (TheStreet) -- The freefall in oil prices is creating risk -- and opportunity -- for investors. Although there are some obvious moves you can make to limit your exposure, it's important to know who the winners and losers are in the sector.

Here's a brief overview of what to avoid -- and what to add to your portfolio.

For the first time since 1972, there is no producer cartel dominating the oil market. Prices are therefore free to respond to the law of supply and demand and, with the fracking revolution having hugely increased supply, they will thus remain much lower than in recent years.

That's bad news for the U.S., which with fracking and offshore oil has become a major high-cost oil producer, vulnerable to prolonged price weakness. There are winners as well as losers, however, and wise investors should deploy resources out of their oil production holdings into sectors that seem likely to gain from the change.

With cheap oil locked in, all oil producers are a sell, especially high-cost oil producers in fracking, shale and the deep sea. Although the integrated oil majors such as Exxon Mobil (XOM) - Get Report and Chevron (CVX) - Get Report have a broad spread of production and refining, Suncor (SU) - Get Report , which specializes in high-cost oil from Canadian tar sands, and Petrobras (PBR) - Get Report , which has a hugely expensive offshore drilling program, are unlikely to prosper.

Oil-service companies are also in trouble, especially if leveraged. Seadrill's (SDRL) - Get Report 23% price drop when it unexpectedly eliminated its dividend is just a foretaste of what's to come. Thus, the Halliburton (HAL) - Get Report takeover of Baker Hughes (BHI) is defensive and will end by reducing capital in the sector. Fracking-supplies companies such as U.S. Silica (SLCA) - Get Report are also endangered.

Pipelines, especially contained in Master Limited Partnership structures are a better bet, because low prices increase demand, thus increasing usage. Pipelines connected to high-cost sources such as the Alberta tar sands are probably uneconomic today, however. I'd be very surprised now if the Keystone XL pipeline is actually built.

The big winners in the oil sector are refineries, which benefit from higher sales volume and higher margins when prices decline. In particular, refinery MLPs such as Northern Tier Energy (NTI) , which pay out almost all their earnings as wildly fluctuating dividends, are worth looking at. NTI has a spectacular 16.7% dividend yield, based on the last four quarters' dividends, and that yield could even increase this quarter, as oil prices have declined further. Another likely beneficiary is CVR Refining (CVRR) , a large refinery MLP in Coffeyville, Kansas, that currently sports a 9.9% yield, based on trailing 4-quarters dividends.

Outside the oil sector, you should look at oil users, such as automobile companies like General Motors (GM) - Get Report and alternative uses for consumers' dollars, such as Wal-Mart (WMT) - Get Report . Both should get a good boost from increased purchasing power for consumers paying $2.50 per gallon instead of $4 for gasoline. On the other hand, there's likely to be a bloodbath in the banks that have financed high-cost oil production and the junk bond markets, where 15% of outstanding bonds are now energy-related. All the investment in production that is now uneconomic will have to be written off, causing massive pain among debt-holders.

Internationally, there are some clear winners including Japan and the eurozone, which produce little oil. Japan has other problems that make it a risky bet, but the better-run countries of the EU, such as Germany (perhaps through the iShares Germany Fund (EWG) - Get Report ) or Sweden (the iShares Sweden Fund (EWD) - Get Report ), look like excellent bets that will do better than their recent sluggish track record.

Clearing oil losers out of your portfolio is an urgent task. But redeploying into winners may make the pain worthwhile.

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

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

TheStreet Ratings team rates NORTHERN TIER ENERGY LP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate NORTHERN TIER ENERGY LP (NTI) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."

You can view the full analysis from the report here: NTI Ratings Report

TheStreet Ratings team rates CVR REFINING LP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CVR REFINING LP (CVRR) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and a generally disappointing performance in the stock itself."

You can view the full analysis from the report here: CVRR Ratings Report