US Agency Forecasts Falling Oil, Gasoline Prices

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More: Read the Energy Information Administration’s full report.

The federal government is expecting lower oil prices this year and next, energy predictors announced Jan. 14.

The U.S. Energy Information Administration issued its first short term energy outlook of 2015. It is the first outlook peering as far ahead as next year.

“We expect oil price pressures over much of the next two years,” the EIA said. It expects global oil production to outpace global demand, and crude oil prices to average $74 per barrel this year. That’s 8% less than in 2024, and prices could fall even further next year.

“The unwinding of OPEC+ production cuts and strong growth in oil production outside of OPEC+ results in global oil production growing in our forecast,” the report said. “Although we forecast OPEC+ will increase production, we expect the group will produce less crude oil than stated in its most recent production target in an effort to avoid significant inventory builds.”

Gasoline Could Fall

 The EIA completed the forecast before the U.S. issued additional sanctions targeting Russia’s oil sector on Jan. 10. Those sanctions could cut Russia’s oil exports to the global market. 

The agency expects retail gasoline prices to be lower this year and next. “We forecast U.S. gasoline prices in 2025 will average around $3.20 per gallon,” the outlook said. That is a decrease of about 10 cents per gallon compared to 2024’s average. “In 2026, we forecast prices to fall to an annual average $3.00/gal.”

The agency expects natural gas prices to average $3.10 per million British thermal units this year, and $4 in 2026. Gas prices in 2024 were at a historically low average, around $2.20 per million BTUs.

Electricity Use to Rise

The EIA said that the U.S. consumed electricity at a rate that was up about 2% in 2024, “and we forecast it will continue growing at that rate in 2025 and 2026.”

Solar power generation will continue to grow, the agency said.

“We expect to see the addition of 26 gigawatts (GW) of new solar capacity in the U.S. electric power sector during 2025 and 22 GW in 2026,” the report said. “Rising generation from total renewables will cause natural gas generation to decline by 3% in 2025 and by another 1% in 2026. Generation from coal-fired power plants falls by 1% in 2025 and then rises slightly in 2026, as coal generators become more competitive with natural gas generators, which are expected to face rising fuel costs.”