Gasoline prices are rising nationwide as the summer driving season nears, and oil futures appear poised for a breakout on encouraging economic news and fears about the seriousness of the Gulf of Mexico oil spill.
Over the last week, pump prices saw their biggest jump in more than a month, according to the Energy Department's weekly survey of U.S. filling stations.
Nationwide, the average price of a gallon of regular gasoline rose 4.9 cents to $2.898. In California it rose 3 cents to $3.118.
The national average is 82 cents higher than it was a year earlier; the California average is 76.3 cents higher. California had the highest price in the survey. Colorado had the cheapest average, at $2.727 a gallon.
Oil prices drew strength Monday from government data that showed that consumer spending in March rose the fastest in five months. Crude also was buoyed by figures from the Institute for Supply Management's manufacturing index that showed improvement in April.
Oil briefly topped $87 a barrel over concerns about the potential effects of the spill, which was growing an estimated 5,000 barrels a day, analysts said. But most of those fears were assuaged as the spill had little immediate effect on the petroleum industry and shipping in the Gulf.
"There definitely was a Gulf of Mexico fear premium built into the price of oil today, but it didn't stay that way," said Phil Flynn, an analyst at PFGBest Research in Chicago. For the day, crude oil futures for June delivery climbed 4 cents to $86.19 a barrel. The price hit $87.15 during the trading day, topping the year's previous high of $87.09 last month.
Concerns eased after the Energy Department's Office of Electricity Delivery and Energy Reliability released a report saying seaports and shipping channels in the Gulf were open. "The oil spill has not affected petroleum refinery operations in the region," the report said.
But analysts said oil prices could quickly push to $90 to $100 a barrel if the worst happens; for example, if the leak continues unchecked for the 90 days it should take to drill a relief well to the spill site.
An unchecked flow could shut down shipping and ports in the Gulf. It also could affect oil and natural gas production wells. If wells are shut down, supply problems could quickly result, analysts said. The U.S. gets 24% of its crude oil and 10% of its natural gas from Gulf of Mexico production. About 3% of the nation's coal arrives through the Gulf by ship.
"A total shutdown of business in the Gulf would be the worst-case scenario, but there's no reason yet to believe that any of that is going to happen," said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.