U.S. Gas Prices Poised To Fall Below $3 A Gallon This Summer
However, many U.S. motorists are already enjoying gas prices below $3 per gallon, with GasBuddy reporting that most are paying $2.99 per gallon, with some paying as low as $2.79. Indeed, the median U.S. gas price currently stands at $2.97 per gallon. However, not everyone is smiling at the pump, with motorists in California ($4.49), Hawaii ($4.47), and Washington ($4.41) paying the highest prices for their gas. According to GasBuddy, the top 10% of stations in the country are selling a gallon of gasoline at $4.34, nearly $2 higher than the bottom 10% at $2.54 per gallon. Meanwhile, most U.S. motorists are paying $3.49 for a gallon of diesel, with the median at $3.59 per gallon. The top 10% of stations in the country are selling their diesel at $4.63 per gallon compared to an average of $3.07 per gallon for the bottom 10%.According to the latest Consumer Price Index, gasoline prices declined 8.3% Y/Y over the 52-week period ended June, with oil prices falling more than 20% amid concerns over lackluster demand and potential oversupply by OPEC+. Fuel demand fell 2.5% Y/Y in the week ended July 4, an ominous sign of waning demand in a high-demand season.
Gasoline products supplied, a metric used as a proxy for fuel demand by the U.S. Energy Information Administration (EIA), averaged 9.2 million barrels a day over the past four weeks, good for a 1% Y/Y decline. Extreme heat has been blamed for the lackluster demand, with the experts saying high temperatures have discouraged driving. Summer is typically the peak driving season in the United States.
But inclement weather is not solely to blame here. Improving fuel efficiency coupled with changes in driving patterns in the post-pandemic period--especially remote working--appear to have permanently depressed U.S. gasoline consumption, which is yet to eclipse its all-time high of more than 9.3 million bpd in 2018.
"As we head toward August, I think gasoline will see additional weakness. The national average has a good chance of falling below $3 per gallon in September," said Patrick De Haan, head of petroleum analysis at GasBuddy.
Another growing problem for the oil bulls–electric vehicles. Electric vehicles (EVs) are estimated to currently displace around 3.5 million barrels of oil per day globally, with a significant portion of this displacement occurring in the United States. This displacement is driven by the increasing adoption of EVs, particularly in China, Europe, and the U.S., where they are replacing traditional internal combustion engine (ICE) vehicles. While the percentage of EVs on the road in the U.S. is still relatively small compared to the overall vehicle fleet, the impact on gasoline demand is growing as EV adoption accelerates. The IEA recently published its Global EV Outlook 2025 wherein it predicted that the global EV fleet will displace more than 5 mb/d of crude by 2030, with China accounting for half of that impact. Last year, the global EV fleet hit 58 million EVs, more than triple the tally just four years ago, making up 4% of the global passenger car fleet. The EV revolution is strongest in China, where roughly 1 in 10 cars is electric.
However, oil demand destruction is most rampant in Europe, where EV adoption is most aggressive. Norway has been leading the continent in EV adoption, with 88% of new cars sold in 2024 fully electric, while 3% were plug-in hybrids. Not surprisingly, Norway's oil demand fell 12% from 2021 to 2024.
Norway is a major supplier of natural gas to Europe, consistently ranking as one of the top, if not the top, suppliers of gas to the European Union. According to the European Commission, Norway supplied 52.6% of the EU's natural gas imports in the first quarter of 2025.
By Alex Kimani for Oilprice.com
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