U.S. drivers will spend a smaller share of their income on fuel costs this year than in two decades. New Energy Information Administration data show that fuel costs will account for under 2% of personal disposable income, the lowest level since 2005, excluding 2020.
Fuel prices have steadily declined since 2022, while disposable income has grown at an annual rate of around 4%. This combination reduces financial pressure on American households. Drivers are benefiting from lower expenses and increased spending power.
The EIA projects the average price for regular gasoline at approximately $3.10 per gallon this year. Next year, prices could fall further to around $2.90 per gallon. Both figures represent a notable drop from the $3.30 per gallon average recorded in 2024. Consumers already notice lower fuel costs, with current retail gasoline averaging about $3.19 per gallon.
Oil prices, which make up more than half of fuel costs, are expected to decline in the near term. Brent crude could fall from $68 per barrel to about $59 per barrel by the fourth quarter of this year. Early next year, prices may dip further to roughly $50 per barrel.
Higher oil production is a major factor in this decline. OPEC+ members plan to boost output in the coming months, while supply from other global producers is also rising. The International Energy Agency estimates that total supply could grow by 2.7 million barrels per day in 2025 and increase by 2.1 million barrels per day in 2026.
These factors, combined with steady disposable income growth, suggest that fuel costs will remain manageable for U.S. households. Lower expenses at the pump may also encourage spending in other sectors, stimulating broader economic activity.
Analysts note that fuel costs could rise if global demand surges or supply disruptions occur. However, current trends indicate a favorable environment for drivers for the foreseeable future.
Overall, U.S. drivers benefit from lower fuel costs and higher disposable income. These trends reduce household expenses, improve financial flexibility, and allow more resources for other needs.
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