The U.S. Energy Information Administration (EIA) projects that U.S. drivers will spend less than 2 percent of their disposable personal incomes on gasoline in 2025, marking the lowest share since 2005 (excluding 2020). The forecast, outlined in EIA’s September Short-Term Energy Outlook (STEO), reflects expectations of declining oil and gasoline prices that will ease consumer fuel costs.
“The good news for consumers is that we are generally seeing lower prices at the pump, and we expect gasoline prices to keep trending lower through next year,” said Steve Nalley, Acting Administrator of EIA.
Oil and Gasoline Price Trends
EIA expects the Brent crude oil price to fall from $68 per barrel in August 2025 to an average of $59 per barrel in Q4 2025, and further down to about $50 per barrel in early 2026. Growing oil production, particularly from OPEC+, is expected to boost global inventories and put downward pressure on prices.
For U.S. consumers, average retail gasoline prices are forecast to decline to $3.10 per gallon in 2025 and $2.90 per gallon in 2026. The reduced prices mean fuel spending will consume a historically small share of household budgets, compared with the 2.4 percent average of disposable income over the past decade.
Natural Gas and Electricity Outlook
While oil and gasoline prices trend lower, natural gas prices are expected to climb. The Henry Hub spot price is forecast to rise from $2.91/MMBtu in August 2025 to $3.70/MMBtu in Q4 2025 and $4.30/MMBtu in 2026.
Rising natural gas prices will likely drive higher residential electricity prices, increasing from 16.5 cents per kilowatthour in 2024 to 17.9 cents per kilowatthour in 2026. Natural gas remains the largest source of U.S. electricity generation, making it a key cost driver.
Energy Production and Generation Trends
EIA forecasts that U.S. crude oil production will decline by about 1 percent in 2026, while natural gas production will remain relatively flat. Drilling activity is expected to shift more toward natural gas-rich regions due to the widening oil-to-gas price differential, which will reach its lowest point since 2005.
At the same time, electricity generation is projected to grow strongly, driven by rising demand from data centers and industrial customers. EIA expects U.S. electric power sector generation to increase by 2.3 percent in 2025 and 3 percent in 2026, with solar power accounting for most of the growth.
Key Takeaway
EIA’s September STEO signals a shift in U.S. energy markets: drivers will benefit from the lowest fuel cost burden in two decades, while rising natural gas and electricity prices could offset some of those savings in household energy bills. The trends underscore how shifting global oil production, domestic gas markets, and renewable growth are reshaping the U.S. energy landscape.
GreentechLead.com News Desk