EIA expects average US gasoline and diesel prices to decrease in 2024 and 2025

The EIA expects similar supply-side factors to lower retail diesel prices in 2024 and 2025, although US diesel consumption will likely exceed 2023 in both 2024 and 2025.

Crude oil prices in 2024 are predicted to be similar to those in 2023. As a result, the EIA's lower gasoline and diesel price outlooks for 2024 reflect narrowing crack spreads, the difference between the wholesale prices of gasoline and diesel compared with crude oil. Crack spreads reflect the price of refining, and a lower crack spread indicates lower refining cost. The lower forecast crack spread for gasoline is driven by the EIA's expectation of increasing availability of supply even as consumption is reduced.

In 2023, additional refinery capacity came online, raising US operable refinery capacity from 18.06 million bpd in January 2023 to 18.31 million bpd in December 2023. The EIA expects the availability of the new refinery capacity will ease price pressure on petroleum products in 2024. In 2025, lower crude oil prices are expected, which will also reduce gasoline and diesel prices.

New international production from refineries in the Middle East, particularly Kuwait, have also increased the pool of gasoline and diesel on world markets. Increasing global refined products supply will contribute to easing international price pressure on both fuels. Gasoline consumption is likely to remain relatively flat in 2024 and to decrease only slightly in 2025, by less than 1%. In both years, the EIA expects slowing but consistent economic growth. Flat or decreasing gasoline consumption despite economic growth is relatively uncommon. Since 1990, gasoline consumption has declined amid positive economic growth in only two years (2010 and 2012).

Although the EIA expects more diesel production and less strain on US and global inventories to reduce diesel prices in 2024 and 2025, it also expects annual US average diesel consumption to grow modestly, by 1.3%, or about 50 000 bpd, in 2024, supported by continuing economic growth.

The EIA's forecast for gasoline and diesel prices is subject to significant uncertainty, including any factors that might affect crude oil prices and pass through to retail fuel prices. In addition, prices could be higher if more unplanned refinery shutdowns, further disruptions to international trade flows, or new logistical bottlenecks that hinder the movement of fuels between regions occur. By early 2025, the EIA currently expects LyondellBasell’s Houston refinery in Texas will close and Phillips 66’s Rodeo refinery in California will complete its ongoing conversion to renewable diesel production, although the timing of both may vary based on market conditions and the schedules of the owners.

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