Rising Oil Prices Raise the Specter of a Double Dip
Author: Justin Lahart</br></br>A sustained and significant rise in oil prices could derail the U.S. economic recovery by stirring inflation and putting the brakes on spending.</br></br>Oil futures touched $100 a barrel at the New York Mercantile Exchange Wednesday--the highest since before the financial crisis hit in late 2008--before pulling back. Pricier oil drives up the costs of everything from gas at the pump to the raw materials used to make nylon and food packaging. That could mean higher inflation and prompt consumers, who lately have shown more willingness to spend, to cut back their purchases.</br></br>Oil prices have risen 7.35% since the beginning of the year, while gasoline futures have risen 10.67%.</br></br>The question now is whether turmoil in the Middle East and Northern Africa could lead to a sustained cutback in production or delivery disruptions that could drive those prices much higher and push the U.S. as well as other countries back into recession. Supply-driven oil shocks, like the ones that came with the 1973 oil embargo and the 1979 Iranian revolution, were factors in past recessions.