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‹ Analysis & Projections

Short-Term Energy Outlook

Release Date: Jul. 9, 2024  |  Forecast Completed: Jul. 3, 2024  |  Next Release Date: Aug. 6, 2024  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Petroleum products

Gasoline expenditures
We forecast aggregate U.S. expenditures on gasoline will decrease as a share of disposable income this year and next. A combination of falling real gasoline prices and increasing vehicle efficiency resulting from higher fuel economy in internal combustion engines as well as shifts to hybrid and battery electric vehicles means we expect aggregate gasoline expenditures will be less in 2024 and 2025 compared with 2023. Additionally, rising incomes mean U.S. aggregate expenditures on gasoline will represent about 2.3% of disposable income in 2024 and 2.2% in 2025, which would be slightly less than the 2015–23 average and approaching two percentage points less than the 2005–14 average.

Personal disposable income represents individual or household income after federal, state, and local taxes. We use the same methodology in this report that we outlined in a May 2022 Short-Term Energy Outlook supplement. We calculated our gasoline expenditures forecast by multiplying our all grades retail gasoline price times our forecast for annual gasoline consumption. Our forecast for disposable personal income comes from the S&P Global Insights U.S. macroeconomic model. Because gasoline prices, consumption, and personal disposable income are highly uncertain and subject to many different economic forces, our current forecast could be significantly different if any of these variables change this year or next.

gasoline expenditures as a share of disposable income

We forecast regular-grade gasoline prices will average around $3.50 per gallon in 2025 and gasoline consumption will average 8.9 million b/d. Continued increases in vehicle efficiency mean U.S. drivers will drive more miles in 2025 than before, but we expect 1% less U.S. gasoline consumption than in 2023 and 5% less than the record set in 2018. Growth in real disposable income also reduces the percentage devoted to gasoline purchases. Real disposable income grew at a compound annual growth rate of more than 2% per year from 2005 to 2023, making it nearly 50% higher in 2023 than it was in 2005.

Following crude oil and gasoline price increases in the early 2000s, gasoline expenditures averaged 3.8% of U.S. disposable income between 2005 and 2014. After crude oil prices declined almost 50% in 2015, expenditures averaged 2.4% of disposable income through 2023. Although we forecast crude oil prices will increase in 2024 and 2025, retail gasoline prices will remain lower than in 2023 because of declining refiner margins. In addition, we forecast the U.S. vehicle fleet will get 3% more miles per gallon in 2025 than in 2023, reducing gasoline consumption and expenditures. We expect 5% more real disposable income in the United States in 2025, outpacing growth in gasoline expenditures.

Expenditures will differ across the United States depending on region, household income, and driving habits. Households with older, less efficient vehicles or in regions of the country with higher gasoline prices will spend more than those households that drive less or are in regions with lower gasoline prices.

U.S. transportation fuel production
Following a planned refinery closure next year, net production by U.S. refineries and blenders of the three largest transportation fuels (motor gasoline, distillate fuel oil, and jet fuel) will decline by 2%, or 0.4 million b/d between 2023 and 2025. Initially planned to close by the end of 2023, LyondellBasell announced last year its 264,000-b/d Houston refinery would remain open until early 2025. This refinery is in the Texas Gulf Coast region, where these transportation fuels made up an average of 86% of refinery output in 2023, the most on record for the region. In addition to the refinery closure, we forecast 2025 U.S. refinery utilization will average about one percentage point less than in 2023 because of lower refining margins, meaning other refiners will not offset the lost production by increasing refinery throughput. In other years when U.S. refiners closed capacity, utilization increased and mostly offset the loss of petroleum production.

Despite the decline in fuel output, we do not expect significant changes to U.S. petroleum product availability or crack spreads because new refineries opening in other countries will add to world petroleum supply. Although not up to full utilization, Nigeria’s 650,000-b/d Dangote refinery will likely be able to offset most petroleum product losses in the Atlantic Basin market following two planned refinery closures in the United States and the United Kingdom in 2025. The planned closure of the Grangemouth refinery in the United Kingdom in early 2025 may reduce transportation fuel supply by around 0.1 million b/d in the region.

U.S. refinery and blender net production of finished motor gasoline, distillate fuel oil, and jet fuel

Petroleum Products
  2022202320242025
Note: Values in this table are rounded and may not match values in other tables in this report.
WTI spot average
(dollars per barrel)
95788284
U.S. crude oil production
(million barrels per day)
11.912.913.213.8
U.S. liquid fuels consumption
(million barrels per day)
20.020.220.420.6
U.S. crude oil & petroleum product net imports
(million barrels per day)
-1.2-1.6-2.3-2.8
Retail gasoline price
(dollars per gallon)
4.003.503.403.50
Retail diesel fuel price
(dollars per gallon)
5.004.203.903.90

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