The U.S. Energy Information Administration (EIA) forecasts lower gasoline prices and gradual changes in the energy mix over the next two years, according to its Short-Term Energy Outlook (STEO). Retail gasoline prices are expected to decline by about 6% in 2026, with a slight 1% increase in 2027, remaining below 2025 averages in most regions.

The primary driver is falling global crude oil prices, which EIA projects to average $56 per barrel in 2026 and $54 per barrel in 2027, the lowest annual average since 2020. While crude oil has historically contributed over half of the U.S. retail gasoline price, its share is expected to dip below 45% during this period. Regional factors, such as West Coast refinery closures, may limit price reductions locally, while the Gulf Coast is projected to maintain the lowest gasoline prices nationwide.

U.S. crude oil production is expected to remain near 13.6 million barrels per day in 2026, before decreasing slightly to 13.3 million barrels per day in 2027 as lower prices slow drilling activity. Meanwhile, natural gas markets are expected to tighten, with Henry Hub spot prices averaging $3.46/MMBtu in 2026 and $4.59/MMBtu in 2027, supported by rising LNG exports and increasing power sector demand. U.S. LNG exports are projected to grow from 15 Bcf/d in 2026 to 18.1 Bcf/d in 2027, reflecting continued investment in liquefaction capacity and global demand.

The electricity sector is also shifting toward renewables. EIA forecasts 69 GW of new solar capacity additions, leading to a 21% increase in solar generation by 2027. Natural gas generation is expected to remain relatively flat, while coal-fired generation continues to decline. Overall electricity consumption is forecast to grow 1% in 2026 and 3% in 2027, driven by expanding commercial and industrial demand.

The STEO data highlights that while U.S. energy markets face short-term price declines, long-term trends in LNG, solar, and natural gas point to evolving investment opportunities. Lower gasoline prices may relieve consumer costs, while growth in renewable generation and natural gas exports continues to reshape the energy landscape.

References

U.S. Energy Information Administration – EIA expects lower gasoline prices in 2026 and 2027 as crude oil prices fall, January 2026

https://www.eia.gov/todayinenergy/detail.php?id=67024#

U.S. Energy Information Administration – Short-Term Energy Outlook

https://www.eia.gov/outlooks/steo/