Energy Sector Opportunities Amid Declining U.S. Gasoline Prices: Identifying Undervalued Producers and Infrastructure Firms

The U.S. energy sector is navigating a complex landscape in 2025, marked by declining gasoline prices, stable demand, and evolving regional arbitrage opportunities. While lower crude prices have traditionally pressured energy producers, they also create strategic entry points for investors seeking undervalued assets. This analysis explores how companies in the energy production and midstream infrastructure sectors are leveraging these dynamics to strengthen their competitive positions, with a focus on firms poised to benefit from low-cost crude, regional price differentials, and long-term energy transition trends.

The Case for Low-Cost Crude and Stable Demand

The EIA's Short-Term Energy Outlook projects an average Brent crude price of $55 per barrel in 2026, driven by rising global oil inventories and economic slowdowns. Despite this, U.S. energy demand remains resilient. The EIA's Annual Energy Outlook 2025 notes that U.S. crude production is expected to remain concentrated in the Permian Basin, which will account for 6.53 million barrels per day in 2025. This stability is critical for energy producers, as it ensures a baseline of demand even amid price volatility.

For undervalued energy companies, low crude prices present an opportunity to optimize operations and strengthen balance sheets. The Value Sense Blog highlights firms like Shell, TotalEnergies, and Kinder Morgan as trading at significant discounts to intrinsic value while generating robust free cash flow. These companies are leveraging cost efficiencies and strategic capital allocation to insulate themselves from market fluctuations.

Regional Arbitrage: Permian and Haynesville Basins

Regional price differentials and infrastructure developments are reshaping U.S. energy markets. The Permian Basin, the largest source of U.S. natural gas production with 27.7 Bcf/d in 2025, benefits from its proximity to Gulf Coast LNG facilities and its role as a byproduct of oil production. However, its gas output is indirectly tied to oil economics. By contrast, the Haynesville Basin, with production rebounding to 15 Bcf/d, is more directly influenced by natural gas pricing, requiring prices above $3.50/MMBtu for profitability.

Infrastructure projects are bridging these regional gaps. The Blackcomb and GCX pipelines, expected to add 2.5 Bcf/d and 0.6 Bcf/d of capacity by 2026, are easing Permian bottlenecks and enhancing access to Gulf Coast demand centers. Similarly, the LEG and NG3 pipelines are boosting Haynesville gas flow to the Gillis hub, supporting U.S. LNG exports. These developments are critical as the LNG buildout requires an additional 9.9–10.8 Bcf/d of feedgas by 2028.

Financial Resilience of Key Players

Midstream infrastructure firms like Kinder Morgan are capitalizing on these trends. In Q3 2025, Kinder Morgan reported Adjusted EBITDA of $1,991 million and Adjusted EPS of $0.29, with a 6% year-over-year increase in natural gas pipeline transport volumes driven by LNG deliveries. The company's 2025 financial outlook includes a projected Adjusted EBITDA of $8.3 billion and a $9.3 billion project backlog, with $7.9 billion expected to generate a 5.7x EBITDA multiple.

Integrated energy giants like Shell and TotalEnergies are also demonstrating resilience. Shell's Q3 2025 adjusted earnings of $5.4 billion exceeded expectations, supported by strong performance in its gas and upstream businesses. TotalEnergies reported adjusted net income of $4.0 billion for the quarter, with downstream profits surging 76% due to European refining margins. Both companies are prioritizing LNG and energy transition strategies, aligning with long-term decarbonization goals.

Investment Thesis: Strategic Entry Points

The interplay of low crude prices, stable demand, and regional arbitrage creates a compelling case for selective investments in energy producers and infrastructure firms. For example, Permian Resources, a basin cost leader with drilling costs reduced to $725 per lateral foot, is positioned to capitalize on its 4,900+ core drilling locations and $2.6 billion liquidity. Similarly, midstream operators like Kinder Morgan benefit from infrastructure-driven growth and LNG export demand.

Investors should also consider the energy transition's impact. The Energy Markets In Focus Q1 2025 report notes that infrastructure firms will gain from rising global investment in low-carbon energy. This dual focus on traditional energy and decarbonization aligns with the long-term strategies of companies like Shell and TotalEnergies.

Conclusion

While declining gasoline prices may seem daunting, they reveal undervalued opportunities in the energy sector. Firms with strong operational efficiency, regional arbitrage exposure, and strategic alignment with the energy transition are well-positioned to outperform. As infrastructure projects unlock new supply corridors and demand for LNG grows, investors who act now may secure long-term gains in a sector poised for transformation.