Escaping user input from database necessary?

So I know about MySQL injection and always escape all my user input before putting it in my database. However I was wondering, imagine a user tries to submit a query to inject, and I escape it. What if I then at a later moment take this value from the database, and use it in a query. Do I have to escape it again?

So: (sql::escape() contains my escape function)

$userinput = "'); DROP `table` --";
mysql_query("INSERT INTO `table` 
             (`foo`,`bar`) 
             VALUES 
             ('foobar','".sql::escape($userinput)."')");

// insert php/mysql to fetch `table`.`bar` into $output here

mysql_query("INSERT INTO `table2` 
            (`foo`,`bar`) 
            VALUES
            ('foobar','".$output."')");

Does MySQL automatically escape their output or something like that, or should I escape in the second query as well?

This is a testcase but this occurs in some other ways within my program and I'm wondering how tight the security has to be for cases like this.

EDIT

My escape function

static function escape($string){

    if(get_magic_quotes_gpc()) 
        $string = stripslashes($string); 

    return mysql_real_escape_string($string);

}