'Expect higher prices in 2026.' Texas energy professor weighs in on cheap gas

Published: Monday, December 29, 2025 at 3:14 pm

Gas Prices at Historic Lows, But Experts Predict a Rebound

AUSTIN - Gasoline prices across the nation have plummeted to their lowest levels in over four years, with the national average for regular gas currently at $2.83 per gallon. In the Austin area, prices are even lower, averaging $2.37. University of Texas Energy Professor Michael Webber attributes this decline to a combination of factors, primarily reduced demand and an oversupply of oil.

Webber explained that several elements are contributing to lower demand. The rise of electric vehicles, the prevalence of work-from-home policies, and a struggling economy have all played a role in decreasing gasoline consumption. Simultaneously, a significant amount of oil is currently being produced, leading to an oversupply that further depresses prices.

Global events and decisions made by organizations like OPEC also influence domestic gas prices. As oil is a globally traded commodity, geopolitical instability, conflicts, and production decisions by major oil-producing nations can impact the price of oil, which in turn affects gasoline prices. While Texas, a major oil producer, is somewhat insulated from these global fluctuations, it remains connected to the global market.

Looking ahead, Webber anticipates a rise in gas prices by 2026. He notes that low prices often lead to increased demand, as it becomes more affordable for consumers to use gasoline. Additionally, low prices can cause producers to reduce production, as they struggle to make a profit. This reduction in supply, coupled with potentially increased demand, is expected to drive prices upward. The professor pointed out a significant decrease in drilling activity in Texas, with a 20% drop in oil drilling this year alone.

The impact of low gas prices is a mixed bag for Texas. While consumers and businesses that rely on gasoline benefit from lower costs, energy producers face challenges. Lower oil prices can lead to reduced production, fewer jobs, and decreased economic activity in the state. Texas relies heavily on oil and gas revenue, which supports essential services like schools, parks, and local government operations.

Other factors that could influence future gas prices include the continued adoption of electric vehicles and the prevalence of flexible work arrangements. Increased EV adoption and continued work-from-home policies could keep gasoline consumption lower, while a shift towards more traditional work environments or a slowdown in EV adoption could lead to increased consumption.

BNN's Perspective: While the current low gas prices offer a welcome reprieve for consumers, the long-term implications for the energy sector and the Texas economy warrant careful consideration. The transition to alternative energy sources and evolving work patterns highlight the need for adaptability and strategic planning to ensure a stable and sustainable economic future.

Keywords: gas prices, oil prices, Texas, energy, electric vehicles, OPEC, demand, supply, economy, gasoline, production, drilling, revenue, consumers, producers, work from home, 2026

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