Chipotle restaurant
Source: Chipotle.com

The price of oil fell sharply again on Tuesday as investors ran for the sidelines worried that the decline was a referendum on the global economy.

Brent has now fallen for a sixth straight session and U.S. crude pulled back for the fourth consecutive day.

"Oil and oil related stocks are about ten percent of the S&P 500," explained Cramer. Therefore when the price of oil goes down the energy sector follows.

But if your knee-jerk reaction is to sell stocks broadly on oil's decline, Jim Cramer thinks you're too short-sighted.

"Can I just say for the moment that nothing could be more stupid and wrong," said the Mad Money host on Tuesday's broadcast.

"Oil's a tax on our country, both our businesses and our consumers."

Although the conventional wisdom on Wall Street right now is that for stocks to go higher, oil must go higher – the Mad Money host thinks nothing could be further from the truth.

"No amount of tax cutting is going to help small business as much as a decline in gasoline prices," he said. "Same goes for the consumer."