Policy changes in the White House such as the Trump administration implementing tariffs, revoking electric vehicle (EV) mandates and emphasizing drilling are going to transform the fuel market in the United States.
Patrick DeHaan, head of petroleum analysis at GasBuddy, talked about how quickly will these changes take place, what is expected and how it will effect retailers at CSP's Convenience Retailing University in Nashville, Tennessee, last week.
First, take a look at the current fuel landscape in the United States.
The Current Fuel Landscape
The United States is still the world's largest oil producer, said DeHaan. U.S. oil production is ahead of Saudi Arabia and Russia, producing 13.5 million barrels a day, compared to 6 million barrels in 2012.
DeHaan expects oil and natural gas production and in the United States to grow slowly over time, subject to market conditions.
“Currently, where the U.S. sits, a lot of the barometer is what consumers are paying at the pump,” he said. “Americans are very loud about what they pay, whether it's too high or too low, or a lot of other issues, like who's in the White House.”
Since COVID and the Russian invasion of Ukraine, the markets have recalibrated, DeHaan said. Even with a couple of years of normalization, Americans still expect prices to come down.
In 2024, U.S. consumers spent $411 billion on fuel.
“A lot of consumers are still sore over the fact that [fuel] is not 99 cents a gallon, but they're not sore over the fact that they get paid $65,000 a year now instead of $25,000, so nostalgia is really powerful when it comes to gas prices,” said DeHaan. “Yearly spending, when it comes to consumers and what they feel at the pump, it's not really the price, it's what they spend, and inflation adjusts.”
GasBuddy anticipates that, adjusted by inflation, 2025 will be the second lowest year, excluding COVID, for household spending on gasoline since 2016.
Gasoline prices are likely to start making their seasonal advance, which is normal with more Americans out and about in the spring and summer and the pipelines’ switchover to summer gasoline, DeHaan said, but politicians are going to point fingers. Typically, gas prices peak in April and cool down by Memorial Day.
There's still plenty of wild cards though. Take a look at DeHaan's predictions below.
Tariffs
Canada and Mexico now face a 25% tariff on all goods imported into the United States, and China received an additional 10% tariff, doubling the import tax imposed a month ago, as of Tuesday.
There could be an overnight change to margins that could last a couple of weeks, DeHaan said. While retailers have to navigate what that means, refineries are going to see a jump in oil prices.
The United States gets about 4.5 million barrels of oil from Canada every day.
It could be problematic for the Great Lakes, the Midwest and the Rockies, he said. It will hit the Northeast as well because it does not have enough refining capacity. Its major refinery caught fire and was shut down in 2019.
A lot of the products that end up in markets like Boston and Maine come all the way down from Canada into the United States. So that could affect diesel, heating oil, jet fuel, propane and more.
Tariffs on Mexico are not as impactful for the fuel industry, DeHaan said, as the United States only receives about 700,000 barrels of oil a day from Mexico.
China tariffs are also something to watch. China has a lot of refining capacity, so that could be a big deal for exporting and meeting the needs of the global marketplace, he said.
We've seen some pushback as well. In the last couple of weeks, states that have said that they may push ahead against federal government rules that could create even more fragmentation.
“I think this political intensity is going to increase," he said. "It's going to be a challenge sometimes to figure out the complexities of that, but you could, in theory, eventually see a state that makes an investment in a refinery.”
Energy
Corporate Average Fuel Economy (CAFE) standards are another uncertainty.
President Trump plans to revoke the EV mandate, he said in his inaugural address on Jan. 20. “With my actions today, we will end the Green New Deal, and we will revoke the electric vehicle mandate, saving our auto industry and keeping my sacred pledge to our great American autoworkers,” he said. “In other words, you’ll be able to buy the car of your choice.”
The mandate that the Biden administration put into effect in 2021 aimed for 50% of all new vehicles sold in the United States to be electric, plug-in hybrid or hydrogen-powered by 2030; stricter fuel economy standards for automakers; EV tax credits for consumers; grants to grow the EV charging network across the country; and domestic manufacturing of EV infrastructure.
“If CAFE standards are rolled back, that's probably going to lead to an environment where there will be maybe not higher gasoline consumption, but a longer period of elevated consumption,” said DeHaan. “If that's dismantled, there could be a relatively immediate effect where companies are not really going to have to invest in research and development anymore, so they're going to put out vehicles that probably don't get much more fuel efficiency.”
E-85 has been dying off in the United States and a lot of people have been replacing that with E-15, he said. Manufacturers haven't been building a lot of fuel-flexible vehicles because they haven't found a lot of success with consumers.
“E-15 is probably the area to concentrate,” he said. “A lot of manufacturers have approved E-15 vehicles. And I would look for the fuels climate to start supporting E-15, a lot more. You could even see something like an E-25 or E-30 that replaces premium fuel.”
Consumers are still uneducated about what E-15 is, he said.
Drilling
The efficiency of oil companies in the United States has improved over the years, DeHaan said. People will drill more, but there's a lot of companies that improved deficiencies. Some of the majors haven't, but everyone's been, you know, fairly disciplined right now.
COVID put a lot of oil producers out of business in the United States or at least produced some of the smaller names, he said.
“There's been a very cautious attitude taken on how far and how fast we're going to increase drilling,” said DeHaan. “But the rate count has bounced back up a little bit. When you talk about Russia, if [OPEC] increases oil production, there's probably a lot less new drilling that's going to happen in the years ahead in the U.S., but it's certainly going to be much easier if companies do want to increase drilling, if they do want to explore and bring a new source of oil to the market.”
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