Cramer preparing for second American Revolution

(Click for video linked to a searchable transcript of this Mad Money segment)

The Mad Money host thinks investors are witnessing a second American Revolution. And the outcome could transform this nation as drastically as Lexington and Concord.

"For years America has suffered under the tyranny of Brent crude, that's the international oil benchmark based on a handful of mostly British oilfields in the North Sea," Cramer explained.

However, the Americans defeated the British in 1776 and he thinks something similar is about to happen once again in 2013 – this time on the oil fields.


Around the globe oil and related products have largely been priced off Brent crude. And for at least the past several years the price of Brent has been higher than West Texas Intermediate (WTI), the kind of oil pumped here in the United States.

"The enormous price differential persisted for so long because many U.S. oil companies in the heartland simply couldn't get their product to the coasts. We just didn't have enough pipeline capacity to service all of the massive new discoveries," Cramer said.

However, the US just scored a strategic advantage.

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"The pipeline companies have been working overtime to lay new pipe," Cramer said. "Now they have more capacity running from West Texas to the refining markets in Houston, right on the gulf coast."

And capacity has increased to a point that Cramer thinks the global landscape has now tilted in favor of America.

And he believes the price action in Brent versus WTI confirms his outlook. "The spread is dead," he said. "On Monday WTI and Brent closed about $1 apart. And I bet the spread will stay tight because there's so much new pipeline capacity coming. In fact, I could easily see the West Texas Intermediate price going higher than Brent, because it's higher quality oil," Cramer said.

Cramer sees the shift as nothing short of an American Revolution because he believes not only will WTI become significantly more important to global markets, but he thinks the new found oil deposits should lead to North American energy independence by 2020.

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The Mad Money host thinks this shift impacts a slew of companies.


If Cramer is right and the price of West Texas Intermediate crude from the heartland of America has closed the gap with Brent crude, landlocked oil producers should shine. "Beneficiaries include companies such as Continental Resources, EOG Resources, Whiting Petroleum, Pioneer Resources and Carrizo," Cramer said.

Also Cramer suspects the oil tanker business could be on the verge of a renaissance. "The way to play that is Nordic American Tankers," he said.


"If the spread is dead, you need to sell the landlocked refiners that were benefiting from the spread, companies like HollyFrontier and Marathon Petroleum," Cramer added.

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