The U.S. Energy Information Administration’s August 2026 Short-Term Energy Outlook projects national average regular gasoline prices falling from about $4.01 a gallon in the third quarter to roughly $3.72 in the fourth quarter, and down to $3.41 by the first quarter of 2027, according to EIA’s own Short-Term Energy Outlook report. If that forecast holds, drivers heading into the holidays should see relief at the pump rather than the usual seasonal creep upward.
Where prices stand right now
As of the week of August 25, 2026, the national average price for regular gasoline was $4.085 a gallon, according to EIA’s own weekly Gasoline and Diesel Fuel Update. That’s elevated relative to where EIA expects the fourth quarter to land, and the agency’s own outlook explains why: reduced oil shipments through the Strait of Hormuz have been squeezing global oil inventories and keeping crude prices high near-term.
Regional prices vary widely around that national number. EIA’s weekly data puts the Gulf Coast (PADD 3) at the cheap end, $3.638 a gallon, while the Rocky Mountain region (PADD 4) runs $4.359 and the West Coast (PADD 5) sits at $5.147 — with California alone averaging $5.450. The East Coast (PADD 1) and Midwest (PADD 2) fall in between, at $3.921 and $3.934 respectively.
What’s driving the projected drop
EIA’s forecast ties the expected decline directly to crude oil. The agency projects Brent crude averaging around $85 a barrel in the third quarter of 2026, then gradually falling as global oil inventories rebuild and production recovers, easing toward $69 a barrel by 2027. The outlook also notes that high crack spreads — a measure of refinery profitability — should keep crude oil inputs to refineries relatively strong through the end of 2026, which helps prevent a supply-side squeeze on the refined-fuel side even as crude prices swing.
Put simply: EIA’s own numbers show 2026 as a year with a full-year average retail price around $3.78 a gallon, dropping further to $3.29 in 2027, as the current Hormuz-related supply tightness proves temporary and crude markets rebalance toward looser supply.
What it means for your wallet through the holidays
For a household that fills up a 15-gallon tank weekly, the difference between a $4.01 per-gallon average and a $3.72 average works out to roughly $4.35 saved per fill-up, or somewhere around $17 a month — not life-changing, but a real, EIA-projected direction change from the price spike drivers have been living with over the summer. Households in the Gulf Coast region are already closer to that lower figure than the national average suggests; those on the West Coast and in California have considerably further to fall before hitting anything resembling the projected Q4 national number, since regional price gaps of this size — over $1.50 a gallon between the Gulf Coast and California — don’t close just because the national average moves.
The one wild card in an otherwise orderly forecast
EIA’s own outlook is explicit that the near-term price strength is tied to a specific geopolitical chokepoint: reduced oil shipments through the Strait of Hormuz, the narrow waterway that a large share of the world’s seaborne crude passes through on its way from the Persian Gulf. The agency’s projected decline assumes that disruption eases and global inventories rebuild on a fairly predictable schedule. If shipments through the strait stay constrained longer than EIA currently expects, the whole downward glide path shifts later and the $3.72 fourth-quarter number becomes less reliable — which is a meaningfully different risk than the usual seasonal refinery-maintenance or hurricane-related supply hiccups that show up in most fall forecasts.
It’s also worth noting that EIA revises the Short-Term Energy Outlook monthly, and the report explicitly frames these as projections rather than guarantees. The agency’s own crude-price assumptions — Brent easing from roughly $85 a barrel now toward $69 by 2027 — are themselves forecasts built on assumptions about OPEC+ production decisions and non-OPEC supply growth that could shift in either direction between now and when households are actually shopping for holiday travel.
The takeaway
This isn’t a private forecasting firm’s guess — it’s the federal government’s own energy-data agency, using its own crude-oil and refinery-margin modeling, projecting a specific, falling price path through the end of the year and into 2027. The direction is down, the driver is easing crude supply once the current Hormuz-related disruption fades, and the size of the relief — roughly 30 cents a gallon by winter, another 30 cents by spring — is modest but real. Whether it actually shows up at your local pump on schedule will depend on how quickly that Hormuz supply picture actually normalizes, which is the one variable in this forecast that isn’t purely a matter of EIA’s own modeling.