NEW YORK (Real Money) -- It shouldn't be this simple.
Investors shouldn't be able to say that oil prices are down, so sell oil stocks and buy airlines. This business is usually much more complex than that.
But there is a bizarre confluence of cause and effect right now that is so simple, investors ignore it at their own peril.
First, let's deal with the losers: the oil companies.
They are constantly innovating and making it faster and cheaper for oil companies to find oil and extract it. They are great American technology companies, offering oil companies a chance to maximize all the properties that they have in a much more efficient manner.
Both companies reported terrific quarters. They were both realistic: They know that 2015 will be a tough year because oil has been cut in half.
But there is an amazing amount of drilling still going on, some big programs being initiated worldwide and a remarkable long-term view that in the end, oil will go higher, and no one wants to miss out on that rebound.
All three of these companies said that the United States has been the hardest hit by the decline in rig count, which Baker Hughes maintains, is starting to fall precipitously.
However, something else is at work that matters tremendously.
All three companies made it clear that oil and gas drilling of the best properties in the United States remains unabated, and the only way that these domestic companies can meet their obligations is to generate ever-greater cash flow. And the only way to do that is to produce more, not less, oil.
So putting it all together shows production growth that can only increase this quarter and maybe even the next as the world isn't cutting back and the U.S. producers must overproduce and tap their best properties using the terrific technology that these companies offer.
This company reported a monster quarter with great revenue growth in part because customer traffic remains strong, the result of consumers feeling flush courtesy of lower gasoline prices. There is just more traveling.
Second, Delta said that it could see more than $2 billion in savings from the lower fuel costs, and it could be even better when some hedges come off for 2016. Plus, the company bought a refinery not that long ago, and that operation went from losing $46 million to making $105 million.
And what is Delta going to do with all of that profit?
Is it going to start a price war and buy more planes and expand beyond its reach? Nope, it is going to pay down debt and return capital to shareholders.
Putting it all together, the oil services companies are saying that given how much work they have, the idea of oil rallying any time soon is fanciful. And Delta is saying that given its robust travel numbers and its tremendous swing in fuel costs, it is well prepared to profit from this windfall.
The losers? The domestic oil companies that have to pump like mad just to stay in business.
Editor's Note: This article was originally published at 2:33 pm EST on Real Money, Jan. 20.