Oil. It is as simple as that. It is often referred to as the hidden tax. The more money being spent on fuel for our cars and to heat our homes means less money circulating in the economy. Less available spending money means less growth. This doesn't effect just the U.S. but can have global implications as well.

Oil is up almost 70% from a year ago and the closer the barrel price inches toward $40, the greater the chances that a prolonged war with Iraq will drive the economy into recession. Historically, every time oil prices have risen 60% in a year, we have found ourselves faced with a recession. The only exception to that rule came in 1987.

Oil kick starts an recession in many ways. Companies reliant on gasoline sometimes buy their fuel in advance at certain prices. This is referred to as hedging. But this is a short term fix with the increased cost sent to the consumer in the form of surcharges. Other companies need to find more efficient ways to use the energy they need for production taking valuable money away from growing their businesses. Still other companies have postponed new investments in equipment. Rising oil prices keep the ranks of the unemployed full also. There are currently 2 million less folks employed than there were roughly two years ago and the situation seems unlikely to improve.

Current numbers point to two disturbing facts. Folks are paying 50% more for gas than a year ago. Energy costs have risen to 5% of a family's budget. this means less disposable income to spend at the mall. Strategic oil inventories are low leaving the administration with a less influential quick fix at their disposal.

Is a recession likely? Yes if two things take place: The war with Iraq lasts a long time, and the price oil doesn't see any significant retreat as summer approaches.

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