Projected Decline in U.S. Gasoline Prices and What It Means for Drivers

Driving into a gas station to fill your car’s tank is becoming less painful by the day.

Gas prices have fallen below $4 a gallon for the first time since the end of March in much of the United States, a roughly 13% decline from the mid‑May peak of $4.57, according to AAA and GasBuddy data.

If a cease‑fire between the United States and Iran takes effect this weekend and the Strait of Hormuz reopens in the coming weeks, lower oil prices—and consequently lower gasoline prices—are likely.

GasBuddy reported a national average of $3.95 per gallon on June 18, while AAA estimated $3.999.

The lowest state‑wide average was $3.382 in Indiana (GasBuddy) and $3.399 in Indiana (AAA). The most expensive states remain Hawaii, California, Washington, Alaska and Oregon, all above $5 per gallon.

How low could retail prices go? Veteran oil trader John Kilduff, based in New York, predicts a possible dip to $3.50 per gallon in the next few weeks if crude settles around $68 a barrel. Crude closed at $76.60 a barrel on June 18, and $68 was the price level on February 27, just before the first missile attacks on Iran.

Long‑term forecasts show even lower prices: AAA’s model projects a national average of $2.84 per gallon by December 31, 2025, with GasBuddy estimating $2.82.

At $3.50 per gallon, a 15‑gallon fill‑up would cost about $52.50. By comparison:

• Using the June 18 price of $3.96 per gallon, the same fill‑up would be $59.40 (about $84 in California).

• At the May peak of $4.56 per gallon, the cost would be $68.40 (approximately $91.60 in California).

• If the December 2025 price of $2.84 per gallon materializes, the fill‑up would be $42.60.

Lower gasoline prices would provide real relief to commuters, families, and anyone who relies on a vehicle for daily activities.

However, investors in oil companies such as Chevron, Exxon Mobil, and Shell are unlikely to celebrate, as their stocks have already fallen in response to recent price drops.

Will this scenario unfold?

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History suggests that sharp price spikes tend to be followed by rapid declines as demand eases, according to Kilduff.

For example, in 2022 oil prices surged after Russia invaded Ukraine, pushing AAA’s average gas price to $5.016 per gallon on June 14, 2022. By September, prices had dropped 23.7% to $3.829, ending the year at $3.195—a decline of more than 36% from the June peak.

Gas prices fell in 2023, 2024, and 2025, and analysts projected a potential oil glut in 2026, which could further depress gasoline costs.

The key variable now is the ongoing U.S.–Israel conflict with Iran. The Strait of Hormuz, which previously handled about 120 tankers a day (roughly 20% of global crude supply), must reopen for supply chains to normalize.

Bank of America’s June 17 Energy Weekly report estimates that the war has removed 11–14 million barrels of oil per day from the market for months.

Reopening the strait will take weeks, if not months, due to a backlog of stranded vessels, crew‑change requirements, and the need to clear mines and relocate Iranian naval forces.

Additionally, Gulf states must restore production and repair facilities that have been shut or damaged during the conflict before they can resume full exports.

Risks to the optimistic outlook

Several factors could derail the anticipated price decline:

Prolonged conflict. Fighting between Israel and Hezbollah continued on June 18, and a scheduled diplomatic meeting in Switzerland was abruptly canceled amid renewed hostilities.

Disruption of Russian oil exports. Increased Ukrainian attacks on Russian oil infrastructure could push global oil prices higher.

Strategic reserve replenishment. Countries that tapped their petroleum stockpiles to cushion supply shocks may begin restocking, adding upward pressure on demand.

Rising U.S. dollar. A stronger dollar—driven by large federal deficits and higher interest rates—can increase the dollar price of oil, potentially offsetting any supply‑side improvements.

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