Gas prices recede and could continue dropping in 2025, forecast finds
Motorists can expect modestly lower U.S. gas prices in 2025 as inflation eases and amid booming domestic oil production.
After accelerating for much of the first half of the year, prices at the pump dipped in the second half of 2024, AAA data shows. Nationwide, a gallon of regular gas now averages $2.98 a gallon, down nearly 12 cents from a year ago, according to tracking service GasBuddy.
The median U.S. price is $2.89, although fuel costs can vary widely depending on the region and state. Drivers in Hawaii, as usual, face the steepest prices at $4.47 per gallon, followed by California ($4.27) and Washington ($3.81), GasBuddy said in a new report. The cheapest gas is to be found in Oklahoma ($2.51), Mississippi ($2.55) and Texas ($2.59).
"After a few weeks of rising gas prices, the national average has reversed course, declining as we close out 2024," Patrick De Haan, head of petroleum analysis at GasBuddy, said in a statement. "2024 will mark the second consecutive year of a decline in the national average."
In its 2025 Fuel Outlook, GasBuddy says it expects fuel prices to continue easing next year. After averaging $3.33 in 2024, the national average for a gallon of regular is forecast to dip to $3.22 in 2025, according to GasBuddy data.
That could provide further relief for consumers, who continue to grapple with elevated prices for staples like food and rent. Most economists expect inflation to fall in 2025, though many caution that President-elect Donald Trump's threat to impose sweeping tariffs and deport unauthorized immigrants could cause consumer prices to rise.
"We expect the underlying core [Personal Consumption Expenditures] inflation trend to fall from 2.8% to 2.1% by the end of 2025 as catch-up inflation comes to an end next year and softer wage pressures translate to more modest price increases," Goldman Sachs analysts said in a research note. "The tariffs in our baseline would boost realized inflation to around 2.4%."
The U.S. is the world's leading producer of crude oil, averaging 12.9 million barrels per day in 2023 — a record for any nation around the world, according to the Energy information Administration.
