UPDATE 1-US gasoline price surges 13 cents in latest week-EIA

Mon Feb 27, 2012 6:37pm EST

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* Gasoline prices up nearly 20 cents in 2 wks

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* Obama facing criticism over rising gas prices (Adds details, background)

By Ayesha Rascoe

WASHINGTON, Feb 27 (Reuters) - U.S. drivers paid 13 cents more at the pump in the past week, the government said on Monday, reporting the biggest weekly spike in nearly a year at a time of raging debate about energy policy in a presidential election year.

U.S. gasoline prices have climbed nearly 20 cents in the past two weeks, up 33.8 cents from a year ago, the U.S. Energy Information Administration said in its weekly survey of service stations.

Republicans have blamed rising fuel prices on the Obama administration's decisions to limit offshore oil drilling and delay approval of a big pipeline project from Canada. Democrats cited speculation and have urged the administration to tap strategic reserves, pressure producing nations to boost output, and hasten development of energy alternatives.

The last time gasoline prices rose more than 13 cents a gallon in one week was a 13.7 cent jump in early March 2011.

In California, gasoline prices jumped more than a quarter in the past week, pushing the average to $4.29 a gallon -- up more than 45 cents in the state in the past two weeks. The region has dealt with the effects of the idling of the third-largest refinery on the West Coast.

The spike in gasoline prices comes as oil prices hit their highest level nearly 10 months last week on tensions with Iran. Oil prices, which account for as much as 80 percent of the cost of gasoline, settled at $108.56 a barrel on Monday.

Facing heat over rising fuel prices, President Barack Obama on Monday welcomed a move by TransCanada to begin building the southern portion of its Keystone XL pipeline, which would move a glut of oil in Cushing, Oklahoma to Gulf coast refineries.

Analysts say this latest turn in the Keystone saga won't do much to rein in fuel prices which have been rising on tensions in the Mideast and not on a shortage in the United States. Analysts also say Obama's announcement on Monday will not quiet critics angry at the White House for rejecting the northern portion of the Keystone pipeline that would transport Canadian oil sands crude to the United States.

TransCanada said Monday that it was also re-applying for a federal permit for the project's northern leg.

Republicans have said the administration's rejection of TransCanada's Keystone XL pipeline shows that the administration is not fully committed to energy security.

Obama defended his administration's energy policies last week, arguing that the United States cannot drill its way to low energy prices.

Saying there is no "silver bullet" for energy prices, Obama touted government efforts to support development of alternative fuels for transportation and the increase in U.S. oil production since he took office.

In 2011, U.S. oil production reached its highest level in eight years. Still, critics complain that Obama's policies have led to declines in oil development on federal land, while most growth in oil output has come from private and state lands. (Reporting by Ayesha Rascoe; Editing by Bob Burgdorfer and David Gregorio)

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