The escalation in fighting in Libya is increasing fears of a civil war and with signs of political unrest spreading throughout the Middle East and North African nations the price of crude continues to climb.

Many wonder when the tipping point will be reached and the economic growth across the world is impacted. I asked Chris Lafakis, the energy and financial markets economist at Moody's Analytics about this latest surge and what it means to the U.S. Economy.

LL: Oil continues to climb as fighting in Libya intensifies, how high do you think it will go?

CL: WTI crude oil futures have risen from $86.20 to $104.72 while we have lost less than 1% of global crude oil production. Since economic analysis suggests that oil prices should rise by a lot less than 21.5 percent given a 1 percent reduction in oil supply (that has since been filled by Saudi by the way), we can be sure that there is a significant supply uncertainty premium currently embedded in the price of oil. It is difficult to predict when this premium will evaporate, but rest assured it will at some point. A supply uncertainty premium of this magnitude is unsustainable. I would be very surprised if WTI prices pierced $110.

LL: Heating oil is going up as well as gasoline, what kind of impact will this have on the economy as consumers get squeezed?

CL: Rising heating oil and diesel prices do about 44 percent as much damage as rising gasoline prices. The $18.50 increase in oil prices that we’ve experienced over the past couple weeks will, if sustained over the course of a year, cost consumers $20.4 billion just in higher home heating oil and diesel costs. It will costs consumers $46.3 billion in higher gasoline costs if sustained over a year. That’s equivalent to more than a third of the $120 stimulus that we got from the payroll tax reduction in the tax compromise last December.

LL: The airlines and other industries that are crude based are all being impacted. Do you anticipate slower hiring as companies have to shell more out for oil?

CL: Airlines only respond to rising energy prices if they are sustained for an extended period of time since the price of oil is so volatile. If oil were to go back down to $90 within a month, airlines wouldn’t change their behavior at all. If the oil price shock was sustained for an extended period of time, say 6 months, they would start to increase fares or add fees such as seat change fees or checked baggage fees. I don’t think higher oil prices would slow hiring as much as it would prompt them to raise ticket prices or fees.

I focused on the airline industry because that is one of the industries whose energy costs represent the greatest percentage of their overall cost of doing business. The only other industries in the same category as the airlines are energy-intensive manufacturing industries such as car making and steel making. The truth is that most industries that are not able to raise prices will see their profit margins contract because of rising oil prices since most of them buy petroleum products (gasoline, diesel, heating oil, jet fuel, kerosene, residual fuel, etc) in varying degrees.

But this increase in business costs will not be enough to slow hiring in any industry except maybe those that are the most energy-intensive. And even then, just because companies are less profitable doesn’t mean they will slow their rate of hiring.

CL: The effects of higher oil prices are almost immediate. It takes about a week for higher crude oil prices to raise prices at the pump. And gasoline prices are the main channel through which higher crude oil prices effect our economy.

LL: Some of the oil the North East consumes the Light Sweet crude Libya produces, will we see a fragmented economic/consumer impact as this plays out?

CL: Only 5 percent of Libyan exports are to the US, and Libya accounts for less than 2 percent of global crude oil exports. So we’re talking about a very small amount of crude oil that can be offset by slightly higher imports from other foreign oil producers like Canada or Saudi Arabia. One key point is that about half the country prices the oil that they import off of Brent crude oil prices (the Northeast is in this half), while the other half of the country prices their crude oil purchases off WTI (which is substantially lower than Brent right now). Gasoline prices could be higher in areas where refineries price the oil they buy off of Brent instead of WTI.

LL: While the world watches the Mid East turmoil, is there anything else they should be looking at when it comes to crude?

CL: The main thing we need to be focused on is geopolitics. The way in which Libya unfolds and the extent to which unrest spreads to Iran and Saudi Arabia will go a long way in determining how quickly the substantial supply uncertainty premium that is currently embedded into crude oil prices fades.

__________________________________________

Questions? Comments? Email us at

Follow  on Twitter @ twitter.com/loriannlarocco

Follow NetNet on Twitter @ twitter.com/CNBCnetnet

Facebook us @ www.facebook.com/NetNetCNBC

A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."