We just ended the cheapest December at the gas pump since 2020, according to AAA, as the world is producing more crude oil than it needs. These lower prices are expected to hold in 2026, barring any major disasters or disruptive geopolitical conflicts.
U.S. oil companies may not be happy about low prices, but Americans at the pump should be in luck in the new year.
“Consumers should expect gasoline prices to be 10% to 15% lower in 2026 than they were in 2025,” said Doug Terreson, an energy expert and author of the book “Can’t Deny It.”
“And that should be constructive for economic growth and consumer spending and consumer behavior overall,” he said.
That’s because U.S. consumers are particularly sensitive to gasoline prices, according to Ed Hirs, an energy economist with the University of Houston.
“That’s something we all see at least once a week, and it’s something that comes out of our pocket and goes into the gasoline pump,” he said — unlike, say, our electricity bill, which may get automatically paid in the dead of the night.
But it’s important to remember, what goes down must come up again. These things are cyclical. Because “the cure for low oil prices is low oil prices,” Hirs said.
Low prices tend to increase the demand for crude while encouraging oil companies to cut back production.
“Once supply and demand start to recalibrate, then inventories will start to recalibrate,
said Terreson, “and that’s what’s really going to be the driver of price.”
After we get through this lower price period in 2026, Terreson added that you can rest assured your gas prices will start to go back up again.
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