New Jersey is set to increase its gas tax by 2.6 cents per gallon starting January 1, 2025. This change follows a significant tax hike in 2017 that raised the gas tax to 44.95 cents per gallon, making New Jersey the state with the 8th highest gas tax in the United States. Currently, the average driver in New Jersey pays approximately $301 annually in gas taxes, which has sparked criticism regarding the government's handling of gas pricing and consumer autonomy. The state also maintains a ban on self-serve gas stations, further limiting consumer choice in how they purchase fuel.
In a broader context, as Massachusetts prepares for the holiday travel season, the average gas price there stands at $2.97 per gallon as of December 9, 2024. This price reflects a national trend of declining gas prices, with the U.S. average recently dropping to $3.175 per gallon, the lowest in over three years. The decrease in prices is attributed to rising gasoline inventories and seasonal changes in demand, encouraging nearly 80 million Americans to travel by car this Thanksgiving.
Looking ahead, GasBuddy projects that national average gas prices will drop to $3.22 per gallon in 2025, down from $3.33 in 2024 and marking the lowest prices since 2021. This decline could lead to Americans spending $115 billion less on fuel in 2025 compared to 2022, with typical household fuel expenditure projected at $2,252, which is still above 2019's $1,952 but below 2022's $2,715. Factors contributing to this trend include increased refining capacity, balanced supply and demand, and lower crude oil prices. Patrick De Haan from GasBuddy notes that increased capacity stabilizes the market, which is expected to keep prices below $3.50 per gallon in 2025. However, California may see price increases due to environmental regulations, while the Midwest and Gulf Coast are anticipated to have the lowest prices.
In 2025, gas prices are expected to fluctuate, peaking at $3.53 per gallon in April and dropping to $2.89 by December. Total U.S. gasoline spending is projected to reach $410.8 billion, reflecting an 8% decrease from $423.1 billion in 2024. Diesel prices are anticipated to average $3.48 per gallon, with regional price variations potentially seeing West Coast cities like Los Angeles and San Francisco reaching $5.13 and $5.96 per gallon respectively. In New Jersey, prices are expected to range between $3.08 and $3.44 per gallon, according to recent forecasts from Kiowa County Press.
However, potential disruptions from President-elect Donald Trump's proposed tariffs on Canada and Mexico could complicate this forecast. Trump aims for gas prices below $2, but industry experts remain skeptical, noting that a 25% tariff could raise prices by 30-70 cents per gallon, given that Canada and Mexico are major sources of U.S. oil imports. Caution is advised for unforeseen disruptions, as highlighted by Sarah Emerson from ESAI Energy, who emphasizes the market's vulnerability.
While New Jersey's tax increase may complicate the financial landscape for drivers, the overall trend of lower gas prices in states like Massachusetts—where prices have fallen to $2.87 per gallon—could provide some relief for travelers this holiday season. As discussions continue around gas pricing and regulation, the impact on consumer behavior and travel plans remains to be seen, especially with the evolving economic landscape heading into 2025. The forecast assumes prices will remain above $2 throughout 2025, with a low of $2.81 expected in December 2025. The U.S. is currently the largest oil producer, but increased supply could lead to a glut, impacting prices negatively.