Trump's Early Economic Win: Gas Prices Expected to Drop in 2025

As the new Trump administration takes office, there's a glimmer of hope for American consumers: gas prices are expected to drop in 2025. This potential early economic win for President Trump could be driven by a combination of increased domestic production, slowing demand growth, and geopolitical stability. However, several risks and uncertainties could impact this forecast, making it crucial to monitor market developments and adjust expectations as needed.



Increased Domestic Production
One of the primary factors contributing to the projected decrease in gas prices is the expected increase in domestic production under the Trump administration. In 2023, the U.S. averaged more than 12.9 million barrels per day of oil production, with the Energy Information Administration projecting an average of 13.2 million barrels per day for 2024. If Trump's energy policies, such as increased drilling and reduced regulations, lead to further production growth, this could result in a supply glut, driving prices down.

Slowing Demand Growth
The International Energy Agency (IEA) predicts that global oil demand will increase by almost 1 million bpd in 2025, compared to nearly 2 million bpd in 2023. This slower growth in demand, largely due to the end of the post-pandemic release of pent-up demand and below-par underlying global economic conditions, will also contribute to the decrease in gas prices.

Geopolitical Stability
Geopolitical tensions can disrupt gas supplies and drive up prices. However, if geopolitical tensions ease in 2025, this could contribute to a decrease in gas prices. For instance, the halt of Russian piped gas transit via Ukraine on 1 January 2025 has added uncertainty to the European gas market, which could impact global gas prices. A more stable geopolitical environment could help drive down prices.



Risks and Uncertainties
Despite the promising outlook for gas prices in 2025, several risks and uncertainties could impact this forecast. Geopolitical risks, extreme weather events, tariffs, economic slowdowns, supply gluts, demand growth, technological advancements, and market volatility are all factors that could influence the gas price trajectory. It is essential to remain vigilant and adaptable in the face of these potential challenges.

In conclusion, the projected decrease in gas prices in 2025 offers an early economic win for President Trump. However, it is crucial to monitor market developments and adjust expectations as needed to account for the various risks and uncertainties that could impact this forecast. As the new administration implements its energy policies, the gas market will be an essential indicator of their success in driving down prices and providing relief to American consumers.