BOSTON ( TheStreet) -- Political instability in Libya, coming on the heels of government revolt in other oil-producing nations, is driving up the cost of crude oil, and the impact of rising petroleum prices go beyond what you pay at the pump. Everything from groceries, clothing and electronics will potentially cost more.
Saudi Arabia has pledged to make up any shortfall, which helped drive up the stock market early this week after a selloff last week.
The worst-case scenario, however, is that Saudi Arabia also suffers political unrest, causing supplies to drop and oil prices to rise to as much as $150 to $200 a barrel, bringing gas prices to the $5-a-gallon mark.
Even if that pessimistic outlook doesn't come to pass, any degree of oil inflation has measurable effects on a U.S. economy so entwined with the fuel source. According to the International Monetary Fund, a $10-a-barrel increase in the price of oil reduces U.S. GDP growth by 0.5%.About half of every barrel of oil is used to produce gasoline. The rest finds a use in a wide array of consumer products -- those made of plastic, for instance. The plastics industry, dependent on oil for its manufacturing, is the third-largest manufacturing industry in the United States, employs more than 1.1 million workers and creates $379 billion in annual shipments. "If the trend of increasing oil prices were to continue, it would have an adverse effect on consumer spending on various industries," says Justin Molavi, an energy analyst for IBISWorld Market Research. "In general, discretionary purchases will be the first consumer costs to go. As a result, industries like travel, accommodation and retail will feel the pain. As consumers spend more on fuel, they are likely to pull back on expenses they know are not necessary. The economic recovery could be compromised if consumers pull back spending sharply. The focus for businesses over the next few months will be whether to pass along costs or reduce the bottom line." The following are just some of the expenses we'll see rise if along with fuel prices:
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