Unleaded Regular Gas Price Analysis - May 2025
Summary
Key Findings: Gas prices in May 2025 reached $3.306 per gallon, showing a modest decline from April but remaining significantly lower than the previous year. The 12-month decline of 12.0% reflects broader market trends driven by lower crude oil prices and reduced refinery margins.
- Current Price: $3.306 per gallon in May 2025
- Monthly Change: -0.7% decrease from April 2025
- Annual Change: -12.0% decrease from May 2024
- Three-Year Trend: Continued decline from 2022 peak of over $5.00
Current Market Position
The $3.306 per gallon price in May 2025 represents a continuation of the downward trend that began after the 2022 price surge. This places current prices:
- 24 cents lower than April 2025 ($3.330)
- 45 cents higher than the 12-month low in December 2024 ($3.145)
- $0.449 lower than May 2024 ($3.755)
Recent Price Trends
Short-Term Movement (1-6 months)
- 1-month: -0.7% decline from April
- 3-month: +1.4% increase since February
- 6-month: +3.9% increase since November 2024
Long-Term Perspective (12+ months)
The data reveals a significant 12.0% annual decline, marking the third consecutive year of decreasing prices since the 2022 peak when prices exceeded $5.00 per gallon.
Key Market Factors Affecting 2025 Prices
Primary Drivers
Lower Crude Oil Prices
In 2025 and 2026, lower gasoline prices are primarily driven by lower crude oil prices, with the Brent crude oil spot price falling to $64 per barrel in May 2025. The EIA forecasts Brent prices will fall to an average of $61/b by the end of 2025 and average $59/b in 2026.
Refinery Capacity Changes
The EIA expects reduced U.S. refinery capacity in 2025 compared to 2024, including the expected closure of LyondellBasell's Houston refinery in the first quarter. This has contributed to wider crack spreads but not enough to offset the impact of lower crude prices.
Demand Patterns
The EIA forecasts a small increase in U.S. gasoline consumption in 2025 and increased net imports to offset less refinery production.
External Economic Factors
Policy Uncertainty
President-elect Donald Trump's proposal to impose a 25% tariff on imports from Mexico and Canada is a major wildcard that could disrupt current forecasts, potentially leading to higher fuel costs. GasBuddy estimates that a 25% tariff on Canada and Mexico would lift retail gas prices by 30 cents to 70 cents a gallon.
Domestic Production
U.S. crude oil production is forecast to decline from an all-time high of 13.5 million barrels per day in Q2 2025 to about 13.3 million b/d by Q4 2026, averaging just over 13.4 million barrels per day in 2025.
Regional Variations
Based on historical patterns and current market conditions:
- Highest Prices: West Coast states (California, Washington) due to environmental regulations and limited refinery access
- Lowest Prices: Gulf Coast and Midwest states with proximity to refineries
- Rocky Mountain Region: Prices expected to remain relatively flat due to steady regional population growth and constrained production/transportation infrastructure
Industry Forecasts vs. Reality
Expert Predictions
Industry analysts forecast the national average for 2025 to be around $3.22 per gallon, representing an 11-cent decline from 2024's average of $3.33. The May 2025 actual price of $3.306 aligns closely with these projections.
Long-term Outlook
The EIA estimates U.S. average gasoline prices in 2025 will decrease by 11 cents per gallon (about 3%) compared with 2024, with a further decrease of about 18 cents/gal (6%) forecast for 2026.
Historical Context
Comparison to Previous Years
| Year | May Price | Annual Change |
|---|---|---|
| 2025 | $3.306 | -12.0% |
| 2024 | $3.755 | +1.9% |
| 2023 | $3.685 | -20.0% |
| 2022 | $4.604 | +54.9% |
The current price represents a significant moderation from the extreme volatility seen in 2022-2023.
Risk Factors and Uncertainties
Geopolitical Risks
Natural disasters or geopolitical trouble could disrupt supplies, with risks including wider Middle East crises involving Iran or Saudi Arabia that could drive oil prices sharply higher.
Policy Implementation
Potential tariffs and immigration policies by the incoming Trump administration could cause gas prices to rise in 2025, according to economists.
Seasonal Factors
With refinery maintenance season approaching when refiners typically reduce gasoline production, motorists should be prepared for the spring rally to kick off.
Consumer Impact
Household Spending
Americans are projected to spend $115 billion less on fuel in 2025 compared to 2024, providing some relief for consumers dealing with other inflationary pressures.
Economic Sentiment
Gas prices play an outsized role in how Americans feel about the economy and their financial health, serving as a real-time barometer for the cost of living.
Conclusion
The May 2025 gas price of $3.306 per gallon reflects a market in transition, with lower crude oil prices driving the primary downward pressure while refinery capacity constraints and policy uncertainties create upward risks. The 12% annual decline demonstrates the continued normalization from 2022's extreme highs, though prices remain well above pre-pandemic levels.
Looking Forward: While the overall trend suggests continued modest declines through 2025, external factors including potential trade policies and geopolitical developments could significantly alter this trajectory.