Generally, more democracy has a positive effect on the global economy. Freer people have the ability to buy, sell, and innovate as they please. But the political unrest in the Middle East is having a negative effect on the markets thus far. What makes those revolutions different? The Middle East is a major source of the world's oil. Political uncertainty in the region leads to oil supply uncertainty. For that reason the recent events in nations like Egypt and Libya have been worrying investors and businesses: if less oil flows out of the region to the rest of the world, fuel prices will rise.

In fact, we're already seeing oil prices hit highs this week not seen in two-and-a-half years. These increases come after oil prices already began to rise moderately throughout much of 2010, as the global economy strengthened. High fuel costs could dampen global economic growth, since firms and consumers would be forced to spend more on energy. This effect could also thwart the recently strengthening U.S. economy. Here are ten ways rising oil prices endanger the recovery:



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First, it's important to note that none of these ten factors are mutually exclusive. Indeed, many are complementary. It's not likely we would see consumer sentiment fall without the residential real estate market taking a hit, for example. That's why prolonged high oil prices are so dangerous -- they could create a domino effect that would poison many different aspects of the U.S. economy.