Drivers in the United States are forecast to expend their smallest share of disposable personal income toward gasoline costs in two decades, according to new data published Tuesday by the U.S. Energy Information Administration (EIA).
Why It Matters
Gas prices traditionally fluctuate and are impacted by various factors, including weather events and oil costs, as well as military action and overseas wars. They can be viewed by Americans as an economic indicator in some instances, with household incomes going toward filling up vehicles in addition to other payments towards groceries, housing costs and health care.
President Donald Trump campaigned on reducing energy costs nationwide and has issued several executive orders in an attempt to boost America’s energy independence.
What To Know
Falling oil prices in the EIA’s Short-Term Energy Outlook issued September 9 will lead to a drop in gasoline prices, with expectations that the average U.S. retail price for regular-grade gasoline will average about $3.10 per gallon this year—down 20 cents per gallon from last year.
“Driven by falling gasoline prices, U.S. drivers’ gasoline expenditures as a share of disposable personal income are likely to be the lowest since at least 2005—excluding the pandemic-affected year of 2020,” the EIA said. “We estimate expenditures will average less than 2 percent of disposable income this year, down from an average of 2.4 percent over the previous decade.”
EIA spokesperson Chris Higginbotham told Newsweek via email that the administration’s calculations involve totaling gasoline expenditures by taking their gasoline price forecast and multiplying it by their gasoline consumption forecast. They then divide the gasoline expenditures by total disposable income for the United States, with the Bureau of Economic Analysis the historical source for disposable income and the forecast coming from the EIA’s running of the S&P Global macroeconomic model.
“In addition to lower gasoline prices, gasoline consumption remains below its pre-pandemic average,” Higginbotham said. “This is largely because people are using more efficient cars.
“We expect vehicle miles traveled (VMT—a measure of how much people drive) to be 3 percent higher in 2025 than the five-year average before the pandemic, while the average vehicle gets 8 percent more MPG (miles per gallon) than during the same period.”
Patrick De Haan, head of petroleum analysis at GasBuddy, told Newsweek via email on Wednesday that around Memorial Day this year, they reported that adjusting for inflation and excluding the COVID pandemic (2020, specifically), Americans were leaving the smallest percentage of their paycheck at the pump since 2003.
“So, yes, this generally tracks,” De Haan said. “We have not yet put together our 2026 Fuel Outlook, but I would expect gas prices would be similar to slightly lower in 2026.”
The EIA also forecasts a slight increase in U.S. gasoline consumption next year, the first Short-Term Energy Outlook showing an increase for 2026.
“The forecast for rising gasoline consumption is driven by an upward revision to the number of people of working age compared with our previous forecasts, and lower gasoline prices compared with our forecasts from earlier this year.”
What People Are Saying
EIA spokesperson Chris Higginbotham told Newsweek via email: “We expect that gasoline consumption will rise because of population growth, employment growth, falling gasoline prices, and increases in income.”
What Happens Next
Gas prices have become cheaper in recent years, though Americans feel the pinch when paying other energy-related costs.
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