Customers pump gas at a COSTCO in Aurora, Colorado. The U.S. EIA says gasoline costs for consumers are the lowest levels since 2005. (Photo By Kathryn Scott Osler/The Denver Post via Getty Images)
Denver Post via Getty Images
The U.S. Energy Information Administration (EIA) reports in its September Short Term Energy Outlook that this year’s cost of gasoline for U.S. drivers is the lowest since at least 2005 as a share of disposable income. That bit of good news for consumers and the Trump White House is but one of a wealth of interesting data points contained in this latest EIA report.
EIA Shows Gas Prices Tied To The Price Of Oil
As is pretty much always the case, this year’s drop in the price for gas at the pump has trended in step with a similar downturn in crude oil prices. After reaching a high of almost $79 per barrel, the West Texas Intermediate (WTI) index price has dropped by over 20% to its current level of roughly $63/bbl. Wholesale gas prices have shown a similar drop from an early February peak of about $2.38 per gallon, falling to $1.99/gallon as of this writing.
Diesel fuel prices have followed a similar path since January. That’s another bit of positive news for consumer prices since basically all food, clothing and other consumer goods are transported from factories to market via ships, planes, trucks, and trains which run some variant of Diesel fuel.
More good consumer news comes in the EIA’s projection that further reductions in energy prices remain ahead in the months to come. “We expect the Brent crude oil price will decline significantly in the coming months, falling from $68 per barrel (b) in August to $59/b on average in the fourth quarter of 2025 (4Q25) and around $50/b in early 2026,” EIA analysts say, predicting another 25% drop in crude prices from current levels.
That magnitude of additional price reductions would be supportive of President Donald Trump’s recent statement that he expects gas prices to fall into the $2/gallon range in the coming months. While the current national average retail price for regular gasoline is $3.19 according to AAA, that is inflated by much higher prices in high tax states like California, Oregon, and Illinois. The average gas prices is closer to $2.70 in low price states like Texas, Louisiana, and Alabama.
EIA Sees Natural Gas Prices On The Rise
While low oil prices are never good news for oil-focused drilling companies, EIA says there is good news on the horizon for upstream companies looking to produce more natural gas. “We expect the Henry Hub natural gas spot price will rise from an average of $2.91 per million British thermal units (MMBtu) in August to $3.70/MMBtu in 4Q25 and $4.30/MMBtu next year,” EIA analysts say, a rosy price projection that has been pretty rare across the last 16 years.
Natural gas prices in the U.S. have for the most part been range-bound between $2/MMBtu and $4/MMBtu since 2009. The lone fairly long-term exception to that paradigm came in the post-COVD world in 2022-early 2023, when chronic supply chain and work force issues caused a temporary supply shortage.
Otherwise, the sheer magnitude of America’s natural gas resource has enabled drillers to quickly overwhelm temporary spikes in prices by activating a number of additional drillings and driving prices back down with higher production volumes. With just 110-120 active rigs currently targeting natural gas formation, it is a safe bet that upstream companies would quickly create a similar supply response should domestic gas prices run back up past the $4/MMBtu level as EIA projects.
Anticipating this enduring reality, EIA analysts say they “expect drilling activity in the United States to be more centered in natural gas-intensive producing regions in 2026.”
EIA Report Highlights Tension In The Trump Agenda
These and other data points contained in this EIA report are consistent with the Trump White House’s goal of cutting energy costs to consumers as a major element in reducing the rate of inflation. At the same time, however, the daily news is becoming increasingly cluttered with reports of layoffs taking place in the oil and gas industry and major service companies which deliver another leg of Trump’s agenda: That of American Energy Dominance.
As I pointed out here shortly after last November’s elections, it was never likely that this second Trump presidency would become a replay of the “drill, baby, drill” boom that took place during his first term in office from 2017-2021. The maturity in the development of the big U.S. shale plays, combined with strategies by the bigger corporate drillers to focus more capital resources on increased dividends and stock buyback programs would eliminate that possibility.
Good news for U.S. gasoline consumers almost always means bad news for oil and gas producers. What this latest EIA Outlook illustrates as much as anything else is that inherent tension in these two major facets of the Trump energy agenda remains alive and well.