This may sound eerily familiar: oil prices are spiking, sending shivers from Wall Street to Main Street.

Since the new year began, crude oil has soared more than $7 a barrel to $68.35 - the highest level since late August when hurricane Katrina roiled energy markets. This time, the main impetus appears to be a bad case of international jitters, ranging from Iran to Nigeria to Osama bin Laden. If the tensions don't cool off, energy analysts warn, consumers should brace themselves to pay more at the gas pump in weeks ahead. "It's been one thing after another," says Phil Flynn of Alaron Trading in Chicago.

On Friday, rising oil prices and disappointing earnings sent the Dow Jones Industrial Average into a 213 point dive, one of the sharpest declines since spring 2003. One reason for Wall Street's concern: if the price of oil stays high, it will take money out of people's pockets in a year when consumers are expected to moderate spending anyway.

"Consumer spending may slow down a bit more than thought," says David Wyss, chief economist at Standard & Poor's in New York. "But, it won't drive us into a recession - that would probably take oil going well over $100 a barrel."

Rising oil prices could increase the prices Americans pay for everything from pizza delivery - yes, there is an extra $1 fuel surcharge - to how much money it will cost to get the kids back and forth to hockey practice.

So far, however, many companies have absorbed their higher energy costs. Last year, food and energy added just 1.2 percentage points to the inflation rate, which averaged 3.4 percent.

Still, energy costs are one of the factors the Federal Reserve monitors. The Fed will meet next Tuesday and is expected to raise rates for the fourteenth consecutive time by a quarter percentage point.

Beyond that, how the Fed acts will depend on inflation prospects and its own analysis of the economy.

Typically, oil prices start to retreat by this time in January since there are only about six weeks left to the worst part of the home heating oil season. Other than early December, this winter has been milder in the US than some meteorologists expected. Last Friday, the temperature reached 61 degrees in New York.

While winter in the US has been relatively mild, parts of Europe have faced bitter conditions. This has lead to much higher use of heating oil and natural gas. Last week, fierce winter conditions led Russia to curtail production of oil in its Arctic regions.

But geopolitical uncertainty has shaken up energy markets even more than cold weather in Europe.

Iran, faced with the prospect of economic sanctions for restarting its nuclear program, has warned that the price of oil might rise if the West intervenes. The country's leaders have been vague in explaining how that might happen. Iran exports 2.5 million barrels of oil per day, a significant amount going to Asia.

The other trouble spot is Nigeria which exports about 2.25 million barrels of crude per day, most of it suitable for producing gasoline. Tribal frictions have cut production by about 100,000 to 200,000 barrels of oil per day.

"It's not sizable but any amount has gotten people nervous," says John Felmy, chief economist at the American Petroleum Institute in Washington.

Sunday, the situation in Nigeria remained murky, at best. Four foreign oil workers have been kidnapped by guerrilla forces demanding the release of some tribal leaders. Nigerian newspapers are warning that there could be more attacks in the Niger Delta but the government says it is negotiating in order to calm the region.

Some analysts say the markets will retreat in the weeks ahead. "Once the market realizes there is no real threat of an immediate conflict, the market will calm down and we will see oil prices back in the $50s or $60s per barrel," says Eugenio Aleman, a senior economist at Wells Fargo Banks in Minneapolis. "This is highly political."

Before the jitters in the market, some analysts thought the price would head lower. OPEC oil ministers are still talking about reducing oil production this spring, to avoid a supply glut. The Energy Information Administration (EIA) is forecasting the average price for oil will be $63.30 this year.

"If there was no anxiety about Iran and Nigeria and other countries, we think prices would be much lower than they are now," says Mark Rodekohr, an EIA analyst.

Even though Mr. Rodekohr says that the price of oil should be going lower during the year, he says he would not be surprised to see the price rise to the $70 range, back where it was soon after hurricane Katrina struck. "The key is how long - will it be a day or two or is there enough anxiety to drive it for a little while longer?"

If the price of oil stays high in the weeks ahead, it will likely be reflected in the price at the pump. So far, gasoline price gains have remained relatively modest given the rise in oil prices. Nationally, gasoline is about $2.30 a gallon, up from $2.09 a gallon only a few months ago.

"Oil prices at this level are not factored into the price of gasoline," says Rodekohr.

For 2006, EIA expects a price range of $2.25 to $2.50 a gallon. "We don't see any reason to think it will go below $2," he says. And, if oil moves above $70 a barrel for a sustained period, he says, prices at the pump will move quite a bit higher-even before the spring driving season begins.