Here's Where Energy Costs Are Headed in 2026

Core Insights - Energy prices are expected to show a mixed trend in 2026, with gasoline prices declining while electricity and natural gas prices are anticipated to rise [1][8]. Gasoline Prices - Gas prices are projected to average $3 per gallon in 2026, representing a 10% decrease from 2024. Diesel prices are also expected to drop to $3.50 per gallon, down 7% from 2024 [2]. - The decline in gasoline prices is attributed to increased crude oil production by OPEC nations and a slowdown in global oil demand due to economic uncertainties and a shift towards electric vehicles [3]. Electricity Prices - Electricity prices have risen by 36% over the past five years and are expected to increase further, with residential retail electricity prices likely to rise by 4.2% in 2026 [5]. - The West South Central region, particularly Texas, is experiencing significant electricity demand growth due to data centers and cryptocurrency mining, leading to higher prices in that area [6]. Natural Gas Prices - Natural gas prices are expected to rise, with wholesale prices projected to be 16% higher on average in 2026 compared to the current year, driven by flat production levels and increased exports to meet foreign demand [6]. Economic Impact - Energy costs represent a significant portion of consumer budgets, particularly for low-income households, with a quarter spending over 15% of their income on energy [4]. - While the rise in electricity prices may not significantly impact national inflation, it will likely affect household budgets, especially in regions with a high concentration of data centers [7][8].