Drivers can breathe a sigh of relief as expert forecasts from GasBuddy and the U.S. Energy Information Administration predict a continued decline in national average gas prices through 2025 and 2026, signaling the lowest annual averages since 2021 amidst complex global factors.
The journey to the pump has been a rollercoaster for many Americans, but recent trends and expert forecasts suggest a period of sustained relief. After years of significant volatility, including a historic surge in 2022, gas prices are currently on a downward trajectory that is expected to continue through 2025 and even into 2026.
The Current State of Play: A Welcome Decline in Late 2025
As of mid-October 2025, gasoline prices are noticeably lower than a month and even a year prior. The national average for regular gas currently stands at $3.11 a gallon, reflecting an 8-cent decrease from a month ago and a 9-cent drop compared to the previous year, according to data from The Center Square. This trend is echoed locally, with states like Ohio experiencing significant drops—more than 40 cents a gallon in just one month, settling at an average of $2.70. This favorable shift is largely attributed to higher gasoline inventories and the seasonal transition to cheaper-to-produce winter-grade fuel.
Looking back at late 2024, the national average for regular gas had reached its lowest price since May 2021, closing in on $3 a gallon by late November 2024, with the Oregon average just a penny away from its 2024 low. This momentum has largely carried forward, offering a promising outlook for holiday travel and beyond.
Looking Ahead: The 2025 Forecast
Industry experts from GasBuddy and the U.S. Energy Information Administration (EIA) largely agree on the trajectory for 2025: more good news for inflation-weary drivers. GasBuddy, known for its accurate projections, forecasts the national average for regular gas to fall to $3.22 a gallon in 2025. This would mark a modest but significant decline from an estimated $3.33 in 2024, representing the lowest annual average since 2021.
The EIA’s January 2025 Short-Term Energy Outlook aligns with this sentiment, predicting a decrease of approximately 11 cents per gallon (about 3%) in U.S. average gasoline prices in 2025 compared to 2024. These forecasts suggest that the national average will likely remain safely below $3.50 a gallon for most of 2025, even during the traditional peak driving season of late spring and early summer. Consumers are projected to spend significantly less on fuel in 2025, with GasBuddy estimating Americans will save about $115 billion compared to 2022’s record highs.
Peak Prices and Regional Differences in 2025
While the overall outlook is positive, drivers should still expect some fluctuations. GasBuddy’s projections indicate that gas prices could see a springtime spike, potentially peaking in April at a monthly average of $3.53 per gallon. Daily averages could even reach as high as $3.67 during this period, driven by seasonal increases in demand and the transition to summer-grade gasoline blends.
Regional variations will also persist. While most major U.S. cities may see peak gas prices around $4 per gallon, areas on the West Coast such as Los Angeles and San Francisco could experience averages returning to the mid-$5 per gallon range. This is primarily due to higher fuel taxes, unique fuel requirements, and other state mandates common in these regions.
Beyond 2025: The 2026 Outlook
The positive trend is expected to extend further into 2026, according to the EIA. They forecast an additional decrease of approximately 18 cents per gallon, or another 6%, in U.S. retail gasoline prices. This continued decline is largely attributed to two key factors:
- Lower Crude Oil Prices: Crude oil remains the main ingredient in gasoline, and sustained lower crude prices will translate to lower pump prices.
- Decreasing Gasoline Consumption: The EIA projects reduced gasoline consumption in 2026 due to increasing fleet-wide fuel economy. This includes both the growing share of electric vehicles (EVs) in the U.S. passenger vehicle fleet and improved fuel efficiency in conventional internal combustion engine cars.
However, the EIA also highlights that decreasing U.S. refinery capacity, driven by planned closures like LyondellBasell’s Houston refinery in early 2025 and Phillips 66’s Los Angeles refinery at the end of 2025, may somewhat offset the downward pressure from lower crude prices by widening refinery margins.
Unpacking the Drivers: Why Prices Are Falling
The current and forecasted declines in gas prices are not random; they are the result of several interconnected global and domestic factors:
- Ample Crude Oil Production: The U.S. remains the world’s top producer of crude oil, with production consistently near record highs. While there was a slight dip in late 2024, overall production has been robust since 2009, maintaining strong supply levels.
- Seasonal Fuel Switch: As fall transitions into winter, many regions (including Oregon) switch from costlier summer-blend to cheaper-to-produce winter-blend fuel. This seasonal shift typically contributes to price drops in late fall and early winter.
- Moderating Demand: After a surge in recreational travel post-pandemic, gasoline demand has shown signs of moderation. While U.S. demand ticked up slightly in late 2024, the overall trajectory points to stabilizing or even slightly decreasing consumption, especially as vehicle efficiency improves.
- Expanding Global Refining Capacity: Despite some domestic refinery closures, an overall expansion in global refining capacity helps ensure sufficient processing of crude oil into gasoline, contributing to stable prices.
- Lower Crude Oil Prices: The price of West Texas Intermediate (WTI) crude oil, a key benchmark, has largely traded in a moderate range between $67 and $74 per barrel since mid-October 2024. This stability, coupled with lower demand projections, directly impacts the cost of gasoline.
The X-Factors: Risks and Volatility Ahead
While the outlook is generally positive, the energy market is inherently volatile, and several “x-factors” could disrupt these forecasts:
- Geopolitical Tensions: The fragile ceasefire between Israel and Hezbollah, ongoing unrest in the Middle East, and the war in Ukraine continue to pose significant risks. Any escalation in these regions, particularly involving major oil-producing nations like Iran or Saudi Arabia, could lead to a sharp spike in crude oil prices. OPEC+ decisions on production cuts also remain a crucial influence on global supplies.
- U.S. Policy Shifts: The prospect of a new U.S. administration, particularly potential changes in energy policy, could introduce uncertainty. For instance, President-elect Donald Trump’s past threats to impose tariffs on Canadian and Mexican oil imports could significantly raise retail gas prices by an estimated 30 to 70 cents a gallon, according to GasBuddy’s head of petroleum analysis, Patrick De Haan. However, GasBuddy’s 2025 forecast assumes these tariffs will not be enacted due to their likely negative impact on consumers.
- Natural Disasters: Hurricane season, which runs from June 1 to November 30, always presents a risk to oil infrastructure in the Gulf of Mexico. A major storm could cause supply disruptions and drive prices higher.
- Domestic Refinery Capacity: While global refining capacity expands, specific U.S. refinery closures, particularly on the West Coast, can create regional supply constraints. This can lead to wider refinery margins (crack spreads) and higher local prices, as the EIA predicts for the West Coast in 2026.
The Persistent Question of Sub-$2 Gas
Despite the current downward trend and optimistic forecasts, industry veterans remain highly skeptical of gas prices falling below $2 a gallon. Such a drop, as sometimes promised on campaign trails, is generally only seen during periods of severe economic recession or other major crises that drastically crush demand. GasBuddy’s projections for 2025 anticipate the national average will stay well above $2 a gallon, with the cheapest monthly average expected around $2.81 in December 2025, emphasizing that extremely low prices would likely signal an “economic calamity, not something Americans would cheer.”
Historical Context: Riding the Price Rollercoaster
To fully appreciate the current outlook, it’s essential to recall the recent history of gas prices:
- The 2022 Surge: Mid-2022 saw national averages soar above $5 a gallon, an unprecedented surge that significantly impacted the American economy and consumer confidence. This was largely driven by the immediate aftermath of Russia’s invasion of Ukraine and heightened global crude oil prices.
- 2023 Moderation: Following the 2022 peaks, experts predicted a moderation in 2023, with GasBuddy projecting a national average of $3.49 a gallon. While still higher than desired by many, this represented a significant decrease from the prior year’s average of $3.96. The cooling of global oil prices, as fears about Russian supply disruptions subsided and new buyers like India and China emerged, played a crucial role.
- Pre-COVID Levels: While spending on fuel in 2025 is expected to be significantly lower than the record high of $2,715 per household in 2022, it will likely remain above the pre-COVID level of $1,952 in 2019, reflecting a new baseline for fuel costs.
The composition of gas prices also provides context: roughly 55% of what consumers pay for a gallon of gasoline goes toward the price of crude oil, with refining, distribution, marketing, and taxes making up the rest, according to the U.S. Energy Information Administration.
Regional Insights: Where Fuel is Cheapest and Most Expensive
While national averages provide a general picture, regional differences are always significant:
- Most Expensive States (October 2025): The West Coast consistently holds the top spots due to factors like tight supplies, high transportation costs, and stringent environmental programs. As of October 2025, Hawaii ($4.47), California ($4.66), Oregon ($4.12), and Washington ($4.50) lead the nation in pump prices.
- Least Expensive States (October 2025): States in the south and midwest typically enjoy the lowest prices. Oklahoma ($2.60), Mississippi ($2.67), Arkansas ($2.69), Louisiana ($2.70), and Texas ($2.70) were among the cheapest places to fill up in October 2025. No state has seen an average below $2 a gallon since January 2021, a period heavily influenced by the COVID-19 pandemic’s impact on demand.
Conclusion: Navigating the Road Ahead
The outlook for gas prices through 2026 is largely positive, offering a reprieve to consumers after a period of intense financial strain. The confluence of strong domestic crude oil production, moderating demand, and seasonal factors is driving this welcome trend. However, the energy market remains susceptible to global geopolitical events, domestic policy shifts, and unforeseen disruptions. While the days of $5-a-gallon gas appear to be behind us for the foreseeable future, industry experts like Patrick De Haan of GasBuddy remind us that understanding these underlying dynamics is key to navigating the road ahead with confidence.
