Three Areas to Watch in Energy Markets This Summer

At a Glance

• As the U.S. summer driving season begins, energy markets appear relatively stable
• Gasoline prices often influence public perceptions of inflation

Historically, the period from Memorial Day (May 26) to Labor Day (September 1) sees a seasonal surge in travel, and with it, a spike in gasoline demand that typically influences both wholesale and retail fuel markets. But how is 2025 shaping up compared to prior years, and what are the key signals for energy traders and consumers?

1. Summer Travel

According to the U.S. Energy Information Administration (EIA), the United States consumed an average of 8.94 million barrels per day of finished motor gasoline in 2023. During peak summer travel months, that number often rises. For example, in July 2024, gasoline demand hit 9.4 million barrels per day, the highest since pre-pandemic levels in 2019. 

This seasonal uptick is tied to road travel: Americans tend to drive more in the summer, taking vacations and road trips. While this trend is often anticipated, its effects on the market can still be significant. For instance, due to environmental regulations, refineries shift to summer-grade gasoline blends that are more expensive to produce. This seasonal change in demand can also constrain supply if refineries are already operating near capacity or undergoing maintenance.

As of early May 2025, gasoline prices remain relatively moderate. The EIA projects the national average retail price of regular gasoline will hover around $3.14 per gallon this summer. That’s a notable drop from the $3.54 average seen in summer 2024, and a far cry from the highs of 2022, when prices topped $4.60 in some regions.

Wholesale markets echo this more subdued price environment. As of mid-May, the CME Group RBOB gasoline futures contract for May 2025 delivery was trading at $2.1309 per gallon, with forward contracts declining slightly across the summer. Meanwhile, West Texas Intermediate (WTI) crude oil futures, the benchmark for U.S. light sweet crude, were trading below $61.02 per barrel for June delivery. That is a significant discount from prices in 2022 and even early 2024, and it contributes directly to lower gasoline prices since crude oil represents the largest input cost in refining.

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2. Inflation Risks

Gasoline is one of the most visible components of the Consumer Price Index (CPI), and its fluctuations often influence public perceptions of inflation. In March 2025, the CPI unexpectedly fell by 0.1% month-over-month, primarily driven by gasoline and used car price declines. Year-over-year, core inflation sits at 2.8%, below the Federal Reserve’s recent expectations but still above the long-term 2% target.

There are inflation risks ahead, though. With the new administration’s trade policy strategy taking shape in Q2 2025, especially regarding semiconductors and electronics, some economists warn that import prices could rebound and lift CPI figures in the back half of the year. For now, however, gasoline prices appear to be a deflationary force.

3. A Stable Supply?

The 2025 summer season stands out for its relative calm. In 2022, global oil markets were rocked by the Russia-Ukraine conflict, supply chain disruptions and a post-pandemic demand surge. Gasoline prices skyrocketed. In contrast, 2023 and 2024 showed gradual normalization, though volatility persisted amid OPEC+ production decisions and inflation concerns.

Watch Bob Iaccino discuss U.S. gasoline prices on Bloomberg Quicktake

This year, the backdrop appears more stable. U.S. refinery capacity has recovered to near 18 million barrels per day, and strategic petroleum reserve (SPR) levels have stabilized after aggressive drawdowns in 2022.

While refinery outages or hurricanes could still temporarily jolt supply, there are no major supply-side fears dominating market sentiment at the moment.

One area to watch is global demand. Chinese refinery throughput and international jet fuel demand are both up year-over-year, which could tighten global product balances. However, barring a major geopolitical escalation, these pressures are likely to remain manageable through Labor Day.

Adding to the supply outlook, OPEC has announced plans to gradually resume some crude production after a period of extended cuts, citing signs of steady demand recovery and the need to stabilize market share across member nations.

Outlook into Labor Day

With gasoline futures trending lower and crude oil prices well below recent highs, the 2025 summer driving season is poised to offer a break from the pump price pain Americans experienced in prior years. Demand is expected to climb, as usual, but not to disruptive levels. Inventories are healthy, and refineries appear well-positioned to meet seasonal needs.

For now, inflationary concerns tied to energy appear muted. Gasoline, once a primary inflation accelerant, may instead serve as a modest brake on headline CPI in the coming months. As always, weather events and international tensions could shift the outlook quickly, but entering the summer of 2025, energy markets currently look remarkably stable.

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Originally Posted on June 10, 2024 – Three Areas to Watch in Energy Markets This Summer