It’s a case of déjà vu all over again...
Oil prices hit $100 a barrel today as government supporters and protesters clashed in the OPEC nation of Libya today.
The benchmark crude up nearly $3 today on the New York Mercantile Exchange to close at just under the $100 mark. But around 1 p.m. ET this afternoon prices hit triple digits for the first time since October 2, 2008.
And the rise hasn't been slow - crude has jumped 18% since mid-February.
The unrest in the Middle East - starting in Tunisia and Egypt is now spilling over into Libya, which has the most oil reserves in Africa.
Oil companies have started winding down - or shut down altogether - operations there.
Analysts say concerns about violence in North Africa and the Middle East have added a "fear premium" of about $10 per barrel of oil. The rise has pushed gasoline prices higher in the U.S. AAA says the national average for a gallon of regular rose another two point three cents today to $3.19.
And that has a trickle-down effect. For every one cent increase in gasoline prices, U.S. consumer disposable income drops by about $600 million a year! Given the fact that consumers are responsible for 70%of GDP -- that's a problem.
And, it's not just consumers filling their gas tanks who are hurt.
Rising oil prices sting manufacturers and producers at every level of the economy. For every dollar oil rises, the GDP drops by $100 billion a year.
Continue Reading Below
The transportation sector gets stung the hardest. Airlines face the challenge of recovering more than $1.5 billion in added costs for every dollar the price of oil increases.
So what happens? The airlines are raising prices this week... yet again.
We need to stop being so dependent on foreign oil. The Mideast will continue to be in a state of unrest for a long, long time - we need to control our own prices and our own economy.
How? It's simple.
Drill, baby drill.