U.S. gasoline and diesel prices to decrease in 2024 and 2025

Get ready for some good news at the gas pump! Brace yourself for lower prices in the coming years as we anticipate a positive shift in the energy landscape. In our recent analysis, the outlook for U.S. retail gasoline prices is looking promising, and here's why you should be excited.

First off, we're predicting a drop in average U.S. retail gasoline prices in 2024. Thanks to increased inventories linked to expanded refinery capacity, you can expect to see relief in your fuel expenses. The good news doesn't stop there—2025 is anticipated to bring even more price reductions, courtesy of slightly reduced gasoline consumption.

But what about diesel prices, you ask?

Well, fret not! Similar supply-side factors are set to work their magic on retail diesel prices in 2024 and 2025. Despite U.S. diesel consumption likely surpassing 2023 levels in both years, the overall trend is pointing toward lower prices.

Now, let's talk crude oil. Our crystal ball predicts that crude oil prices in 2024 will closely mirror those of 2023. This prediction sets the stage for lower gasoline and diesel prices next year, thanks to narrowing crack spreads. Crack spreads, which represent the refining cost, are expected to decrease, giving your wallet a break.

Wondering how all this is happening?

In 2023, we saw an increase in refinery capacity in the U.S., going from 18.06 million barrels per day in January to 18.31 million barrels per day in December. The additional capacity is projected to ease price pressure on petroleum products in 2024. Plus, in 2025, we're anticipating lower crude oil prices, providing another boost to your budget.

But it's not just happening domestically—international production from refineries in the Middle East, particularly Kuwait, is contributing to the growing pool of gasoline and diesel on world markets. This influx of supply will help alleviate international price pressures on both fuels, ensuring you continue to benefit from lower prices.

You might be surprised to learn that, despite economic growth, gasoline consumption is expected to remain relatively flat in 2024 and only decrease slightly in 2025. This is a rare occurrence, as historically, positive economic growth has often been accompanied by increased gasoline consumption. However, our forecast suggests a different story this time around.

And for the diesel enthusiasts out there, here's some good news for you too. While we predict a reduction in diesel prices in 2024 and 2025, we also anticipate a modest growth in annual U.S. average diesel consumption. This growth, driven by continuing economic expansion, adds another layer of optimism to the outlook.

Of course, we must acknowledge that our forecast comes with a sprinkle of uncertainty. Factors like crude oil price fluctuations and potential disruptions to international trade flows could influence retail fuel prices. Additionally, unexpected refinery shutdowns or logistical challenges may throw a curveball into the mix.

Looking ahead, we anticipate the closure of LyondellBasell's Houston refinery in Texas and Phillips 66's Rodeo refinery in California completing its shift to renewable diesel production by early 2025. The exact timing of these events may vary based on market conditions and the owners' schedules.