A gallon of regular gas climbed to $3.503 on Sunday -- nearly 38 cents higher than a month ago and up 15 cents in a week, according to AAA, which posts gas prices daily. Oil hit $106 a barrel Monday as escalating violence in Libya seems likely to move the price of crude higher.
It has been said often, though perhaps not enough, that the risk of a double-dip recession stems more from oil prices than anything else.
The cost of gas has now risen to a level that will clearly affect the budgets of both consumers and certain businesses. There doesn't appear to be a single tipping point that triggers a pullback in spending as household transportation needs vary significantly. Obviously, however, more affluent consumers will not be hurt as quickly as middle- and lower-income groups.
Other industries that ship goods over long distances will also be victims of high gas prices. As odd as it may seem, even tech companies that have to ship components and finished products will face much higher transportation costs. Fast-food firms like McDonald's (MCD) and Starbucks (SBUX), with margins already under pressure from the rise in agricultural commodities, will have to pay higher prices to get products to their thousands of stores.
The soaring price of gasoline is death by a thousand cuts to the American economy.