California's average gasoline price jumped nearly 9 cents a gallon in the last week, a federal survey showed Tuesday, continuing a surge that threatens to keep prices high into the peak summer driving season.
In New York, crude oil and gasoline futures soared on political tensions in Iran and Nigeria as well as a major outage at a U.S. refinery.
Light, sweet crude for February delivery rose $2.39, or 3.7%, to $66.31 a barrel Tuesday -- oil's highest close on the New York Mercantile Exchange in more than three months. Gasoline for next-month delivery shot up 9.22 cents, or 5.3%, to $1.823 a gallon on the Nymex.
"There's a lot of nervousness in this market," said Phil Flynn, senior market analyst at Alaron Trading Corp.
Price increases are hitting many U.S. retail gasoline markets, according to the latest weekly survey by the Energy Information Administration, an arm of the Energy Department. The survey was released a day later than usual because of Martin Luther King Day.
Nationwide, gasoline prices edged lower by less than a penny over the last week to an average of $2.32 on Monday for a gallon of self-serve regular. But statewide averages rose in five of the nine states for which the agency reports prices separately: California, Florida, Massachusetts, New York and Washington.
California consumers saw the largest one-week increase as the state's average cost surged 8.9 cents to $2.417 a gallon Monday for regular. That increase followed a jump of more than 11 cents the previous week.
Flynn said higher fuel prices were on the way.
"I think there's a good chance that we'll see gasoline hit $3 a gallon, probably by the summer driving season," he said. "Gasoline supplies are very vulnerable" because production fell behind normal levels after hurricanes Katrina and Rita damaged major U.S. refineries.
Fuel supply worries grew Tuesday as traders digested the implications of a five-week shutdown of the gasoline-making unit at ConocoPhillips' Bayway refinery in Linden, N.J. The oil company, which did not confirm the move, plans to halt fuel production at the end of the month to repair damage caused by a November power outage, according to the Oil Price Information Service, an industry publication.