Petroleum products

Retail gasoline prices
We expect that retail gasoline prices will decrease across most of the United States through the end of 2026. The exception is the West Coast, where refinery capacity reductions are expected to cause an annual price increase next year.

The forecast decreases in retail gasoline prices are primarily the result of lower expected crude oil prices, which comprise about half of the total price of gasoline. We estimate the Brent crude oil price will average $66 per barrel (b) in 2025, a nearly $15/b decrease compared with 2024, contributing to a decrease of about 35 cents per gallon in gasoline prices. In 2026, we forecast the Brent price will decrease an additional $7/b, corresponding to a further 16 cents per gallon decrease in the national average gasoline price.

Lower crude oil prices are partially offset by higher refiner and retail margins (the difference between the crude oil price and wholesale and retail gasoline prices, respectively). Wider refiner margins reflect decreasing U.S. refinery capacity through 2026, including the closure of the LyondellBasell Houston refinery earlier this year, which had a capacity of around 264,000 barrels per day (b/d).

West Coast petroleum product prices will face upward pressure next year because of lower regional refining capacity. Phillips 66 has announced plans to close its 139,000-b/d Wilmington refinery in the Los Angeles area later this year. Valero has submitted a notice to end refining operations at its 145,000-b/d Benicia refinery in the Bay Area by the end of April 2026. The loss of the two facilities will decrease West Coast (PADD 5) operable refinery capacity by 11% and California’s state-level refining capacity by 17%. The resulting decrease in regional gasoline production will tighten fuel supplies, contributing to an increase of 15 cents per gallon in West Coast retail gasoline prices next year, compared with a forecast of a 3 cents per gallon decline on the East Coast and 8 cents per gallon on the Gulf Coast.

Biodiesel and renewable diesel net imports
We forecast a substantial drop in biodiesel and renewable diesel net imports in 2025 due to a change in the federal tax credit. Before 2025, both imported and domestically produced biodiesel and renewable diesel received a $1 per gallon blender’s tax credit (BTC). The STEO assumes the BTC will be replaced in 2025 with the Section 45Z Clean Fuel Production Credit that only applies to domestic production. As a result, imports will be at an economic disadvantage with the new tax credit and will decrease.

With imported biodiesel no longer receiving a federal tax credit, we expect a decrease in biodiesel imports and, consequently, net imports. The decrease is especially large because of high biodiesel imports in 2023 and early 2024. Lower exports due to lower domestic supply will partially offset the decrease in imports.

On top of the tax credit change, a structural change in our data affects the renewable diesel net import forecast, making the decrease appear larger. Before 2025, renewable diesel net imports only included imports and therefore were artificially inflated. In the March Petroleum Supply Monthly (PSM) and April STEO, we introduced renewable diesel export data starting with data from January 2025. In this forecast, we assume about half of the decline in renewable diesel net imports in 2025 is due to the introduction of exports while the other half is due to the tax credit change.