U.S.Energy Costs to Shift as Natural Gas Prices Rise,Oil Declines: EIA Forecast
WASHINGTON - U.S. energy consumers can anticipate a changing landscape over the next two years, according to the U.S. Energy Data Administration’s (EIA) latest Short-Term Energy Outlook released today. While gasoline prices are projected to remain relatively moderate, increasing natural gas prices are expected to drive up electricity costs, even as crude oil production dips.
The EIA forecasts the U.S. average retail price for regular-grade gasoline will be approximately $3.10 per gallon this year, falling to $2.90 per gallon in 2026. drivers are expected to spend less than 2% of their disposable income on gasoline in 2025 - the lowest share since at least 2005,excluding 2020 – compared to a 2.4% average over the previous decade.
However, the agency anticipates a rise in natural gas prices, projecting the Henry Hub spot price to increase from an average of $2.91 per million British thermal units (MMBtu) in August to $3.70/MMBtu in the fourth quarter of 2025 and $4.30/MMBtu next year. This increase is a key factor in the expected rise of residential electricity prices, which are forecast to climb from 16.5 cents per kilowatthour in 2024 to around 17.9 cents per kilowatthour in 2026.The interplay between oil and gas prices is also expected to influence production. With rising natural gas prices and falling oil prices, drilling activity is predicted to shift towards natural gas-intensive regions in 2026. The price difference between crude oil and natural gas is expected to be the smallest as 2005 next year. Consequently, U.S. natural gas production is expected to remain relatively flat, while crude oil production declines by approximately 1% compared to this year.
Demand for electricity is growing, fueled by data centers and industrial customers, with total U.S. generation by the electric power sector projected to increase by 2.3% in 2025 and 3.0% next year. Solar power is forecast to account for the majority of this generation growth in both years.
The full September 2025 Short-Term Energy Outlook is available on the EIA website.EIA’s data, analysis, and forecasts are independent of approval by any othre officer or employee of the U.S. government. Program contact: Tim Hess, STEO@eia.gov. Press contact: Chris Higginbotham, EIAMedia@eia.gov.
