The last time wholesale oil was at this price, Cramer said, gasoline was about $3.35. Therefore, he thinks gas prices are still heading down.
So how do you play it?
Cramer recommends restaurants and retail because once gas goes under $3.50, people start going out again.
He suggests retailers like Phillips-Van Heusen , VF Corp , Polo Ralph Lauren and Under Armour .
In other market news, Cramer questioned the preponderance of negative stories about natural gas, including last weekend’s piece in the New York Times. The article raised questions about the potential of extracting gas from underground shale formations, and questioned whether companies were overstating the productivity of their wells and the size of their reserves.
Cramer said it doesn’t make sense that nat gas companies would overstate reserves. He said companies that have been buying into natural gas have been Chinese national companies or other non-American companies.
“The buyers, the big buyers, are companies that don’t trade on the reserves or don’t trade at all because they are national companies,” he said.
Cramer also doesn’t think nat gas prices are going up.
“We have way too much of it,” he said. “It’s a huge glut.”
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