- EIA's forecast projects national average gasoline prices rising from $3.00/gallon in Q4 2025 to a peak of $4.21/gallon in Q2 2026 (a 40.3% increase), before declining to $2.92/gallon by Q4 2027.
- EIA attributes the near-term increase to a specific, dated event: a June 18, 2026 U.S.-Iran memorandum of understanding reopening the Strait of Hormuz, after which the agency revised its near-term oil-supply expectations and its 2026–2027 price forecast.
- Between EIA's June and July 2026 editions of this same forecast, the 2026 price projection was revised 6.5% lower and the 2027 projection 15.1% lower—a measurable, EIA-published indication of forecast uncertainty over a single month.
- Regionally, the West Coast (PADD 5) is projected to average $4.79/gallon in 2026, versus $3.17/gallon on the Gulf Coast (PADD 3)—consistent with the existing regional price gap persisting throughout the forecast period.
01 Introduction
EIA's forecast projects national average gasoline prices rising from $3.00/gallon in Q4 2025 to a peak of $4.21/gallon in Q2 2026, a 40.3% increase, before declining to $2.92/gallon by Q4 2027. Every month, the U.S. Energy Information Administration publishes the Short-Term Energy Outlook (STEO)—a detailed, quarter-by-quarter forecast of energy prices built from EIA's own supply-and-demand modeling. It is one of the few sources where a claim about future gasoline prices can be checked against an actual government forecast rather than speculation. As of the July 2026 edition, that forecast projects a substantial near-term increase in gasoline prices followed by a decline through 2027 to a level below where prices started. This article presents the full forecast, the assumptions behind it, and a quantified account of how much the forecast itself has changed from one month to the next.
U.S. Energy Information Administration, Short-Term Energy Outlook, July 202602 The National Forecast: Quarterly Prices Through 2027
EIA's forecast shows regular-grade gasoline averaging $3.10/gallon in 2025, rising to $3.64/gallon in 2026, then falling to $3.09/gallon in 2027—but those annual averages hide a much sharper story at the quarterly level.
U.S. Energy Information Administration, Short-Term Energy Outlook, July 2026, Table 2: Energy Prices| Quarter | Retail Price | Quarter | Retail Price |
|---|---|---|---|
| Q1 2025 (actual) | $3.10 | Q1 2027 (forecast) | $3.13 |
| Q2 2025 (actual) | $3.16 | Q2 2027 (forecast) | $3.21 |
| Q3 2025 (actual) | $3.14 | Q3 2027 (forecast) | $3.12 |
| Q4 2025 (actual) | $3.00 | Q4 2027 (forecast) | $2.92 |
| Q1 2026 (forecast) | $3.13 | 2025 average | $3.10 |
| Q2 2026 (forecast) | $4.21 | 2026 average | $3.64 |
| Q3 2026 (forecast) | $3.80 | 2027 average | $3.09 |
| Q4 2026 (forecast) | $3.39 |
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Use the Calculator03 What's Driving the Forecast: Crude Oil Prices
EIA's gasoline price forecast is built on top of its crude oil price forecast. The story starts with a specific, dated geopolitical event: on June 18, 2026, the United States and Iran signed a memorandum of understanding ending their conflict and reopening the Strait of Hormuz. EIA's July outlook explicitly credits this for raising its near-term global oil production expectations and lowering its price forecast from the month before.
U.S. Energy Information Administration, Short-Term Energy Outlook, July 2026, Overview sectionCrude oil is forecast to follow the same spike-then-decline shape as retail gasoline: Brent crude averages $69/barrel in 2025, jumps to $82/barrel in 2026 (peaking near $103/barrel in Q2 2026), then falls to $65/barrel in 2027 as production recovers and inventories rebuild.
U.S. Energy Information Administration, Short-Term Energy Outlook, July 2026, Table 2: Energy Prices ("Crude Oil," Brent Spot Average)Across the same 12 quarters, WTI crude and retail gasoline prices move together closely (correlation of 0.85 across Q1 2025–Q4 2027), and a simple regression of the two series implies that every $1 increase in the price of a barrel of WTI crude corresponds to roughly 3.1 cents per gallon of additional retail gasoline price in this forecast.
Calculated by the authors from EIA, Short-Term Energy Outlook, July 2026, Table 2: linear regression of quarterly WTI crude oil price against quarterly regular-grade retail gasoline price, n=12 quarters (Q1 2025–Q4 2027); slope = $0.031/gal per $1/bbl; correlation coefficient = 0.85.04 How Confident Should You Be? The Forecast Already Moved
A forecast is not a guarantee, and EIA's own numbers make that easy to demonstrate: the July 2026 STEO already revised its 2026 and 2027 price outlook substantially downward from what the June 2026 STEO had projected just one month earlier.
U.S. Energy Information Administration, Short-Term Energy Outlook, July 2026, "Notable forecast changes" table| Metric | June 2026 Forecast | July 2026 Forecast | Change |
|---|---|---|---|
| Retail gasoline, 2026 avg. | $3.90 | $3.64 | −6.5% |
| Retail gasoline, 2027 avg. | $3.64 | $3.09 | −15.1% |
| Brent crude, 2026 avg. | $95/bbl | $82/bbl | −14% |
| Brent crude, 2027 avg. | $79/bbl | $65/bbl | −18% |
05 Regional Forecast: Which Regions See the Biggest Swings
EIA also forecasts gasoline prices separately for each of the five Petroleum Administration for Defense Districts (PADDs): the East Coast (PADD 1), Midwest (PADD 2), Gulf Coast (PADD 3), Rocky Mountain (PADD 4), and West Coast (PADD 5). The same national spike-and-decline pattern shows up in every region, but the price levels differ enormously and consistently.
U.S. Energy Information Administration, Short-Term Energy Outlook, July 2026, Table 4c: U.S. Regional Motor Gasoline Prices and Inventories| Region | 2025 Avg. | 2026 Avg. | 2027 Avg. |
|---|---|---|---|
| East Coast (PADD 1) | $2.98 | $3.51 | $2.91 |
| Midwest (PADD 2) | $2.95 | $3.42 | $2.90 |
| Gulf Coast (PADD 3) | $2.68 | $3.17 | $2.62 |
| Rocky Mountain (PADD 4) | $3.03 | $3.53 | $3.04 |
| West Coast (PADD 5) | $4.10 | $4.79 | $4.24 |
| U.S. Average | $3.10 | $3.64 | $3.09 |
The Gulf Coast (PADD 3) is forecast to remain the cheapest region every year of the forecast, while the West Coast (PADD 5) remains the most expensive by a wide and consistent margin—$1.62 per gallon more than the Gulf Coast in 2026, a gap that barely narrows across the whole forecast period.
Calculated: $4.79 − $3.17 = $1.6206 Diesel and Other Fuels
EIA's forecast covers more than gasoline. Diesel, in particular, is projected to increase more sharply in percentage terms than gasoline before declining.
U.S. Energy Information Administration, Short-Term Energy Outlook, July 2026, Table 2: Energy Prices| Fuel | 2025 Avg. | 2026 Avg. | 2027 Avg. | Q2 2026 Peak |
|---|---|---|---|---|
| Gasoline, Regular | $3.10 | $3.64 | $3.09 | $4.21 |
| On-Highway Diesel | $3.66 | $4.61 | $4.02 | $5.38 |
| Heating Oil | $3.62 | $4.49 | $3.75 | $5.13 |
| Jet Fuel (wholesale) | $2.18 | $2.99 | $2.34 | $3.67 |
Diesel's 2026 average ($4.61) is 26% higher than its 2025 average ($3.66), a larger percentage increase than gasoline's 17%—consistent with diesel's greater sensitivity to the same refining-margin pressure affecting the gasoline forecast.
Calculated: ($4.61 − $3.66) / $3.66 = 26.0%07 Methodology and Caveats
Every figure in this article comes directly from a single EIA publication, with light calculation (percentages, differences, the regression in Section 03) added and disclosed throughout.
U.S. Energy Information Administration, Short-Term Energy Outlook, July 2026- This is a forecast, not a guarantee. Section 04 shows this exact forecast moved substantially in a single month; it will likely move again before the periods it covers actually arrive.
- EIA updates the STEO monthly. This article is built on the July 2026 edition specifically. Readers checking this after several months have passed should look for a more recent STEO release, which will reflect newer information than this article can.
- The regression in Section 03 is this site's own calculation, not an EIA-published figure, built from EIA's own quarterly data to illustrate the crude-to-retail relationship, and only covers 12 quarters—too few to be a robust long-run estimate of oil-price pass-through.
- This site does not have an archive of past STEO reports, so it cannot verify how accurate EIA's forecasts have historically been against actual outcomes—only how much this specific forecast changed between two specific, verified editions.
08 Data Sources
Every figure in this article comes from a U.S. government source. No proprietary, estimated, or third-party data was used.
- U.S. Energy Information Administration. Short-Term Energy Outlook, July 2026. Table 2 (Energy Prices), Table 4c (U.S. Regional Motor Gasoline Prices and Inventories), Overview and "Notable forecast changes" sections. eia.gov/outlooks/steo