Petroleum products

U.S. crude oil production
We forecast U.S. crude oil production will remain close to the 2025 average on an annual basis in 2026 before falling by 340,000 barrels per day (b/d) in 2027. Although there were 13% fewer rigs drilling for oil in the United States at the end of 2025 than there were at the beginning of the year—according to Baker Hughes—production reached a record high last year as rising well-level productivity outweighed this drop. Over the next two years, we expect sustained lower crude oil prices will result in a pullback in drilling and completion activity that is enough to outweigh ongoing increases in productivity.

We estimate U.S. crude oil production set a new record of 13.6 million b/d in 2025. We forecast total crude oil production will average about 13.6 million b/d again this year. In 2027, we expect production to decrease to 13.3 million b/d, down 2% from our forecast for 2026.

In addition to issuing forecasts for 2027, this month we introduced improvements to our historical crude oil and natural gas estimates of regional production breakouts in the Short-Term Energy Outlook. As a result, we have reallocated some historical estimates of crude oil production among the regions going back to the beginning of 2024. The most notable among these changes is that we allocated about 30,000 b/d of crude oil to the Permian region that was formerly part of the Rest of Lower 48 States region.

In years prior, the Permian basin was the largest contributor to overall U.S. crude oil production growth. In 2026, however, we estimate annual production growth for the Permian basin will remain largely unchanged. Decreasing crude oil prices have contributed to falling rig counts. With fewer rigs drilling in the Permian, production growth has primarily come from increasing production efficiency out of maturing wells. This dynamic is even more pronounced in tight oil regions outside of the Permian. In 2026, we expect productivity improvements will continue but be offset by declining rig activity, particularly later in the year as the impact of low crude oil prices on drilling activity becomes more apparent as WTI prices fall below $50/b in 4Q26. In 2027, we expect Permian production to decrease by 1% on an annual basis, reflecting the full impact of the crude oil price decline on drilling activity.

Overall, we expect onshore production in the Lower 48 states will fall by 170,000 b/d this year. This drop is partly offset by production growth of 50,000 b/d in Alaska and 90,000 b/d in offshore Gulf of America (GOA). Production growth in Alaska and GOA is driven by several new projects that are set to come online this year.

In 2027, we forecast crude oil production declines will accelerate. Outside of the Permian, we expect declines in onshore production in the rest of the Lower 48 states will continue. Offshore GOA production also declines next year, unlike in 2026. Offshore projects like those in the GOA are larger, more capital-intensive projects that require longer startup timelines before beginning production. The reduction of new projects expected to begin production in 2027 therefore contributes to the expected fall in production in 2027 due to natural decline rates.

Retail gasoline prices
U.S. retail gasoline prices in our forecast are mostly lower in 2026 and 2027 than they were in 2025. We forecast U.S. gasoline prices in 2026 will average $2.92 per gallon (gal), a decrease of 18 cents/gal or about 6%, compared with 2025. In 2027, we forecast retail gasoline prices will average $2.95/gal. Even with the slight increase in 2027, prices remain below 2025 levels in most regions.

On both a nominal and percentage basis, we estimate the price decrease in 2026 will be similar in scale to the decreases in 2024 and 2025, in which prices declined by about 6% annually. After reaching record highs in 2022, gasoline price decreases reflect both decreasing crude oil prices and narrowing refinery margins. In 2026, falling crude oil prices reduce retail gasoline prices, but the decline is partly offset by increasing refinery margins, the first increase since 2022.

In 2026, we expect lower inventories of gasoline will present some upward pressure for gasoline refinery margins as the United States loses some refinery capacity on the West Coast. We forecast net imports of gasoline will increase to account for the lost capacity and to meet demand. We assume most of this increase in net imports of gasoline will be on the West Coast. We expect this pattern to continue in 2027, which, combined with slight increases in the crude oil price, will contribute to annual increases in gasoline prices compared with 2026.

We estimate the retail gasoline price will decrease in all U.S. regions during 2026. In 2027, we expect increasing retail gasoline prices compared with 2026 in all regions. We forecast the largest retail price increase in 2027 will be on the West Coast due to the loss of refinery capacity in the region. It is the only region where we expect retail prices will exceed 2025 prices on a nominal basis.