NEW YORK (Real Money) -- Blame it on the Permian. That's where the oil is flooding into the markets right now. Sure, it is absolutely true that the Bakken and the Eagle Ford shales are responsible for the lion's share of new oil being produced in this country. Sure, the Bakken in North Dakota is amazing with its 1.1 million barrels a day, double what it was when I went there a couple of years ago, and the Eagle Ford is sensational with 1.5 million barrels a day now. But the Permian is 1.7 million barrels and it is conceivable that it could DOUBLE over the next two years. That's right, double.
Last night, I asked the CEO of Magellan Midstream Partners (MMP - Get Report) , Mike Mears, and he didn't rule it out. Why would Mears know? Because he runs the biggest pipelines out of the Permian. He told me the numbers jump every single day and the more pipe that gets laid, the more we are going to pump. I got the sense that the gating factor is all about exporting, because Magellan is also one of the largest storage companies. He says that while there's storage that could handle most of what's coming out of the Permian right now, if it goes to the levels I am talking about we will have no place to put it and not enough refining capacity to refine it.
Yes, there's that much more coming on line.
I think this decline in oil price is a very real issue for this economy. The boom can be self-fulfilling at this pace. All talk about being continentally sufficient by 2020 is now off the table. I get the sense we could be there within three years at this blistering pace. But without the storage, we will have to cut back on the drilling. And if prices go lower, then the budgets will have to be cut back, too.
In other words, the boom is sowing the seeds of its own demise, being pushed along by the OPEC countries that don't want us to be self-sufficient.
If you take away this boom, you take away the biggest growth opportunities for good jobs. There is so much at risk right now with this price of oil that the selloff can make sense.
Think about it. We have no energy policy. We don't have a fossil-fuel-friendly president who sees what is about to happen: overproduction with no place to put the oil. We can't build the storage capacity, pipelines and refineries to use all the oil we have.
So, what started out as some huge windfall of oil and natural gas is now turning into something that could go very awry with just a few more dollars down for West Texas. We will be knocking the price down ourselves with no outlet for oil. And we will be bringing back unemployment in states that have been the backbone of our recovery.
It is a nightmarish scenario that had been part of a dream come true and it's just a few dollars down from happening, with no government in sight to prevent it.
Sure, it's a worst case scenario. But what exactly in heaven's name do you think the stocks are pricing in?
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
Editor's Note: This article was originally published at 5:31 a.m. EDT on Real Money on Oct. 10.