Gasoline prices heading north in time for Labor Day, election.

OIL prices climbed above $48 a barrel last week, so consumers can brace themselves for steep cost increases during the Labor Day weekend and beyond.

"Preliminary indications are that we're going to see some tightening up before the holiday," said Bob van der Valk, bulk fuels manager for Cosby Oil, a Santa Fe Springs wholesaler.

Nationwide, regular unleaded gasoline prices jumped more than 35 percent earlier this year, to a May 5 high of $2.06 per gallon, according to the Energy Information Administration. In California, the high of $2.33 per gallon was hit during the week of May 31.

Increased imports and domestic production helped stabilize gas prices this summer, as prices dropped to $1.87 a gallon in the U.S. and $2.05 in California.

U.S. inventories are now 4 percent higher than they were a year ago. But several factors have caused crude to skyrocket: Greater demand from China, fears that Russian oil giant Yukos could plunge into bankruptcy, and lower exports from Iraq after the country's southern pipeline was partly shut down last week.

Economists now believe high energy prices and fears of inflation will be a factor in the upcoming presidential election.

Already, there are fears of the kind of "stagflation" of the oil-shocked 1970s, although inflation comes nowhere near the double-digit levels that were seen then.

In June, the inflation rate rose to 3.3 percent, even as American consumers pulled back on spending and consumer confidence plummeted. Retail sales fell 1.1 percent for the month, the largest drop in 16 months.