Oil Shock Stocks

It sure looks like $130 is the magic number. That's the price per barrel that seems to make the stock market quake.

This is not a scientific finding. I did not consult a chart. But I've heard it repeatedly from traders and analysts. The stock market has problems with $130 oil. I would have thought $120 would have been a problem, but $130 is the price point that keeps getting mentioned. Oil today rocketed above that number and the stock market choked.

J.P. Morgan's strategist Thomas Lee told me this two weeks ago: "I think if oil stays at $130, equities are in big trouble...because there's so much pressure here on corporate America because of this oil price."

He said if oil stays that high for very long, companies would start pre-announcing earnings hits. But we saw prices come down earlier this week, and there was a collective sigh of relief in the equities market. That sigh turned into a major gasp this morning when oil soared at a record pace.

We also have seen warnings from companies. These aren't the typical corporate earnings pre-announcements. They are warnings about their very viability.

Look at the airline industry. It's in crisis. Continental Airlines said exactly that this week, as it said it was scaling back on flights, planes and employees. "The airline industry is in a crisis. Its business model does not work with the current price of fuel and the existing level of capacity in the marketplace," wrote Continental ceo Larry Kellner.

Continental joins the other major airlines in a dramatic reduction of capacity and staff that will change the travel industry for a long time to come. It was never an easy business to be in, but we're watching an entire industry unravel and morph before our eyes into a smaller industry that just won't be able to serve the traveling public the way it used to. Consider the ripple effects of that.

Look too at the U.S. auto industry. GM awoke like a sleeping giant this week to the fact that high oil prices are not going away, and even if they do, car buyers don't want gas guzzlers any longer. So the terminally restructuring auto industry will go through another painful revamp, and there will be ripple effects.

I just spoke to Jeff Sprecher earlier this morning. He is the ceo of ICE, the electronic exchange where energy contracts are traded. He pointed to an interesting change in the type of investors in the oil markets.

He says the new speculators in the market these days are not as much the hedge funds, but industry. That would be airlines and other big users of oil that need to know what their future costs will be. They are the ones putting a stake in high oil prices and buying long dated futures contracts.

"The growth area in exchange trading is actually the commercial users of these markets not in the index providers. that's what our data shows. ...What ultimately you're going to see when the data is scrubbed is a lot of people need to hedge in high price, volatile energy markets," he said.

Yet, there are those who keep pointing to these record high oil prices with the expectations that they are a bubble that will soon burst.

Questions? Comments? marketinsider@cnbc.com