:max_bytes(150000):strip_icc()/GettyImages-2249200842-581fd2cc2cc24fb9be0444a07bb7857f.jpg "Here’s Where Energy Costs Are Headed in 2026")
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Key Takeaways
- Energy prices are expected to be a mixed bag in 2026, with gasoline prices falling and those for electricity and natural gas increasing.
- The production of oil has increased, while demand has fallen, which is putting downward pressure on gasoline prices.
- The reverse is true for electricity: demand is surging because of data center construction.
You’ll likely pay less at the pump next year, but higher electric bills may offset those savings.
Energy prices will be a mixed bag next year, according to forecasts. Gasoline prices should fall, thanks to lower crude oil prices. But your electricity bill will keep climbing thanks to the ongoing construction of power-hungry data centers that fuel AI and cryptocurrency. Natural gas prices are also expected to rise.
First, the good news: Gas prices are expected to average $3 a gallon in 2026, the Energy Information Administration forecast. That’s down 10% from 2024. Diesel prices will also drop to $3.50 a gallon on average, down 7% from 2024.
That decline is because OPEC nations have increased crude oil production, and are expected to continue doing so next year. Meanwhile, demand for oil globally is anticipated to slow, as economic uncertainty from U.S. trade policy drags on the world economy, and more drivers switch to electric vehicles, according to Fitch Ratings and other forecasters. Greater supply combined with lower demand means prices should fall.
What This Means For The Economy
Energy costs take up a big chunk of consumers’ budgets. They’re especially burdensome for low-income households, a quarter of which spend more than 15% of their income on energy, according to a 2024 report by the American Council for an Energy-Efficient Economy, an advocacy group.
The reverse is true for electricity, however. Electricity prices have climbed 36% over the last five years, according to the Bureau of Labor Statistics. They are set to go even higher next year, according to the EIA. Residential retail electricity prices are likely to rise 4.2%, the EIA estimated. Price hikes will be higher in some areas of the country.
“[Price] growth is led by the West South Central region, which includes Texas, as electricity demand from data centers and cryptocurrency mining facilities in that region increases,” the EIA said in its November report.
Similarly, if you heat your home with natural gas, expect bigger bills next year. The EIA expects wholesale gas prices will be 16% higher on average in 2026 than this year, as production has stayed flat while the U.S. is exporting more of its gas in order to meet higher demand abroad.
The jump in electricity prices won’t have a huge impact on inflation nationally but it will likely be noticeable in household budgets, especially in areas undergoing a data center boom.
“For now, we don’t expect the rise in electricity prices to move the needle meaningfully on overall inflation nationally,” economists at Oxford Economics wrote in a commentary. “However, the sticker shock associated with higher electric bills stands to be more painful in some regions than others.”
