2025 Fuel Price Forecasts and Trends

The energy industry’s landscape is constantly in flux, with shifting fuel prices and advances in technology and sustainability shaping the market’s future. Read on to learn about the projected prices of propane, diesel and heating oil in 2025 and explore these industry trends further.

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Understanding the State of the Current Fuel Industry

The fuel industry is highly susceptible to market conditions, notably oil and gas prices. As they are dependent on supply and demand, fuel prices are known for being unpredictable. Other factors, such as geopolitical tensions, extreme weather events and the decisions of groups like the Organization of the Petroleum Exporting Countries (OPEC), also contribute to price fluctuations. For example, the Russia-Ukraine conflict has caused oil and gas prices to skyrocket since 2022. As Russia is one of the world’s biggest producers of crude oil, the dynamics of the global supply and demand were significantly disrupted.

This year, the Brent crude oil spot price decreased — a major worldwide benchmark price for oil purchases. It averaged $74 per barrel in September, a reduction of $6/b from August. This decrease resulted from concerns surrounding growth in oil demand around the globe, which outweighed declines in crude oil stockpiles and OPEC’s decision to hold off on production increases until December.

The global production of petroleum and other liquid fuels is expected to increase by 2 million b/d in 2025, with consumption rising by 1.3 million b/d. Today, the United States produces more crude oil daily than any other country. In 2023, the nation’s production averaged 12.9 million barrels per day (b/d), breaking the global record.

Though oil demand is on the incline, the competition from natural gas is also predicted to climb over the next five years. Because natural gas can be cheaper and emit fewer emissions than crude-oil-based fuels like heating oil, states like New Jersey and Connecticut have tried encouraging consumers to switch over by extending gas lines. Similar to last year, the call for clean energy remains.

Fuel Price Forecast 2025

Fuel prices can indicate trends for the upcoming year and beyond. According to the U.S. Energy Information Administration (EIA), households and businesses are expected to spend either less or the same amount on fuel in the winter of 2025 as they did last year, based on their region and main energy source. While the temperatures across the country are set to drop, and consumers will likely use more energy to heat their spaces, fuel prices are also expected to be lower.

In addition to heating homes and businesses, energy sources such as propane and heating oil have many other applications. Along with diesel, these fuels are widely used for residential and commercial purposes. Let’s take a look at how they will perform in the coming months.

Fuel Price Forecast 2025

Propane Price Forecast

Homeowners and business owners can use propane for almost any purpose, from cooking and powering appliances such as dryers to fueling the engines of forklifts and other types of equipment. Around 11 million American households rely on propane as their primary fuel, and 42 million use it for outdoor grilling. One of the main benefits of this fuel is that it is clean-burning. Using propane can reduce greenhouse gas (GHG) emissions, such as carbon dioxide, and air pollutants, like nitrogen oxide.

Propane can be made from crude oil and natural gas, so propane prices are sensitive to fluctuations in these fuels’ prices. Due to lower crude oil prices, the EIA has forecasted propane prices to average $2.40 per gallon during the winter of 2025, a 5% reduction from the previous winter.

Diesel Price Forecast

Diesel fuel is vital to the U.S. economy, as most of the products consumers use have been transported by trucks or trains powered by diesel engines. Most farming, construction and military vehicles and equipment also use diesel as fuel. With many industries prioritizing going green, biodiesel and renewable diesel are more sustainable alternatives that still offer dependable energy.

While economic growth in the U.S. increased consumption by 50,000 b/d in 2024, there has been a decrease in global consumption. This energy source is also produced from crude oil — reduced crude oil prices have led to lower forecasted diesel fuel prices. According to the EIA’s diesel cost projections, retail prices will average about $2.30 per gallon in 2025. The agency also predicts that the price of this fuel will remain relatively stable throughout the year.

Heating Fuel Prices

Heating oil is commonly used to power furnaces and is the primary space heating fuel for 4% of American households, with over 80% of these homes being based in the Northeast.

As a variation of diesel, the projected heating oil prices have been impacted by declining crude oil prices. For the winter of 2025, heating oil will likely cost less than this year’s winter, with an average of $3.50 per gallon — a reduction of 9%. Due to the concentration of this fuel consumption in the Northeast, the U.S. average closely reflects that of this particular region.

Beyond a decrease in prices, the oil and gas industry will see a notable transformation, primarily driven by the adoption of technological innovations, sustainable practices and energy transitions.

Sustainability and Energy Transitions

Continuing from this year, oil and gas companies are prioritizing cleaner energy sources. The fuel industry is becoming greener due to various factors, including regulatory pressure, shifting market demands and sustainability concerns. For example, more stringent regulations on carbon emissions, particularly those regarding carbon pricing, will impact industry operations.

Carbon pricing is a market-based mechanism to reduce GHG emissions by placing a fee on emitting and offering an incentive for emitting less. In the U.S., 12 states are implementing carbon-pricing programs. These states make up the Regional Greenhouse Gas Initiative (RGGI), the first compulsory cap-and-trade program in the country. By 2030, the RGGI aims to reduce emissions to 30% below what the levels were in 2020.

Companies producing oil and gas are also expected to invest more in renewable energy sources, such as solar and wind. It is predicted that by 2025, solar energy generation in the country will increase by 75%, and wind generation will see an increase of 11%.

Effective low-carbon options, such as biofuels, are also expected to be successful in the upcoming year. The EIA predicts that renewable diesel consumption will average 250,000 b/d in 2025 — a 10,000 b/d increase from this year. Other biofuel consumption, including renewable heating oil, is expected to average 40,000 b/d, double what it was this year.

Digitization and Technological Innovations

In 2025, the fuel industry will rely on digital innovations such as artificial intelligence (AI) and the Internet of Things (IoT) to streamline operational efficiency.

AI will help improve gas and oil companies’ decision-making capabilities, enhance operations and predict maintenance requirements. Specifically, the industry will use this technology to better manage operations in upstream, mainstream and downstream sectors. AI-based platforms will also offer beneficial insights via predictive, prescriptive and cognitive analytics.

On the other hand, IoT will enable companies to optimize activities in real time. This technology will boost production efficiency, improve equipment performance, contribute toward worker safety and allow for remote area monitoring. Real-time data collection becomes possible by placing sensors in wells, blowout preventers and choke valves. With this data, companies in the industry can instantly diagnose and deal with equipment issues, which helps field engineers be proactive. IoT solutions can also minimize maintenance costs.

Partner With Foster Fuels in 2025 and Beyond

With an industry subject to so much change, having a trustworthy fuel supplier is vital for your home and business. At Foster Fuels, we offer both residential and commercial fuel services. With over 100 years of experience, we are experts in the industry. With a deep understanding of how the market constantly shifts, our team strives to fulfill your evolving needs as a customer with our quality services and products.

If you need fuel delivered to your home or fuel services to keep your business running smoothly, Foster Fuels is ready to be your reliable partner. We have a solution for you whether you need propane, diesel, heating oil or other fuels like kerosene and diesel. To learn more about deliveries and other services, such as maintenance and installation, contact us today!

Partner With Foster Fuels in 2025 and Beyond