Still Addicted to Oil

George Bush in his 2006 State of the Union address said: “Keeping America competitive requires affordable energy. And here we have a serious problem; America is addicted to oil, which is often imported from unstable parts of the world.”

Well here in 2011 the gas pump still beckons us like a junkie’s needle and in the dark shadows of the unstable parts of the world remain the dealers enabling our addiction to oil. With a two year stock rally in place you have to begin to wonder when rising prices at the pump will have a significant impact on the economy. Back in June of 2008 when oil was $147 per barrel and gas was $4 a gallon, American consumers were cutting back on their spending habits and that monetary pullback affected corporate outlooks which contributed to the sell-off on Wall Street. Today oil is over $100 a barrel with a national average of $3.52 a gallon with drivers on the west coast paying close to $4. 

The destiny of the two year stock rally may be fueled by oil’s influence over the world economy. In the trading pits here at the CBOE there is an old saying: “Puts are your friend.”

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Peter Lusk

Peter Lusk is a Senior Instructor for The Options Institute at CBOE, the educational arm of the Company. Lusk, who joined CBOE in 2007, teaches a variety of options courses for public and institutional investors. Lusk has presented to thousands of investors across the U.S. and has conducted hundreds of webinars for…