Energy stocks were slammed Wednesday as U.S. oil prices plunged to their lowest levels since December 2021. The extent of the decline in West Texas Intermediate crude — down 5.5% to under $67 per barrel — seems overdone in an energy market that remains structurally undersupplied. However, we’re not ready to step in right here to try to catch a falling knife — recognizing concerns over whether fallout from global banking troubles will curtail economic growth. Lower energy costs, at the same time, help other sectors of the stock market. Bad for energy stocks For now, we’re holding onto our three oil exploration and production (E & P) stocks — Coterra Energy (CTRA), Devon Energy (DVN) and Pioneer Natural Resources (PXD) — because their breakeven levels are around $40 per barrel. They can still make money with WTI in the mid-$60s, not to mention they have some of the highest annual dividend yields in the market. The E & Ps are in the blast zone and lower commodity prices will cause producers to think twice about additional investments in production. So, directionally, the move in oilfield services giant Halliburton (HAL) makes sense as well, though we think the drop is overdone given the world does remain structurally undersupplied and needs Halliburton’s services to increase production to level more in line with long-term demand. WTI hit a session low of $65.65 per barrel around 1 p.m. ET. The big question is whether the federal government will make good on its signals to replenish the nation’s Strategic Petroleum Reserve (SPR) at WTI prices below $70 per barrel. Back in the summer, months after Russia invaded Ukraine, Washington tapped the SPR in an attempt to alleviate some of the pressure that sky-high prices at the gasoline pumps placed on consumers. As a result, the SPR has fallen to its lowest levels in decades. @CL.1 YTD mountain WTI performance YTD If the Biden administration were to start buying crude and create something of a floor in the market, that would serve to protect profits at our E & Ps. Any new production at more stabilized levels and/or money for crude and natural gas infrastructure that’s suffered from years of underinvestment would benefit oilfield services giant Halliburton. Good for other sectors While Wednesday’s action is obviously painful for our energy holdings, it highlights the need to maintain a diversified portfolio with exposure to many different sectors and end markets. In addition to lower energy prices being welcome news for the government, it’s a welcome development for companies outside of the energy complex and American consumers who drive two-thirds of U.S. economic activity. Energy is not exactly a consumer staple, but it’s certainly not something we can live without. Regardless of cost, consumers must still fill up their cars or heat their homes. In turn, higher energy costs eat into discretionary spending budgets. On the corporate side, energy oftentimes represents a large input cost. Take Club holding Amazon (AMZN), for example. In addition to the fuel used to get packages to your door on the e-commerce side of its business, the tech giant has previously cited elevated energy costs as a headwind to its Amazon Web Services (AWS) cloud margins. We saw a similar impact on Microsoft ‘s (MSFT) Azure cloud business. Consider a name like Club holding Procter & Gamble (PG). The company’s household products are things people have to use every day. We heard all year long in 2022 about freight and commodity costs impacting margins. As a result, P & G management raised prices. Now, with energy costs coming down, we would expect these input costs to subside a bit. Price hikes, however, will prove sticker than input costs, which should lead to some margin expansion for this best-in-class consumer staple. Bottom line So, what hurts our energy holdings, helps other sectors of the market and other parts of our portfolio. However, with problems at Credit Suisse (CS) dominating Wednesday’s headlines, that may not be much comfort. Everything is taking a hit. But, if we step back and think through what this move means for consumer demand and corporate margins in other sectors, we can be more constructive on Wednesday’s broad stock market decline and search for opportunities. Take a more fundamental view and target those names that stand to benefit from the decline in energy prices freeing up more discretionary income, such as off-price retailer TJX Companies (TJX), shares of which we just picked up earlier in the day. In the afternoon, we used dislocations in markets to buy more Caterpillar (CAT) shares for the second straight day. If we think through the way in which money can be allocated in a lower energy price world, we see reasons to be positive about the move. Even if it hurts a portion of our portfolio in the short term, our commitment to a diversified portfolio can help pick up the slack and help weather the storm. (Jim Cramer’s Charitable Trust is long CTRA, DVN, PXD, HAL, AMZN, MSFT, PG, TJX, CAT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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Energy stocks were slammed Wednesday as U.S. oil prices plunged to their lowest levels since December 2021. The extent of the decline in West Texas Intermediate crude — down 5.5% to under $67 per barrel — seems overdone in an energy market that remains structurally undersupplied.