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Heading into summer, Michiganders can expect lower gasoline prices but higher residential electric rates and increased demand for natural gas, according to the Michigan Public Service Commission’s Michigan Energy Appraisal Summer Outlook 2025.
The summer energy report, released annually by the MPSC, found that Midwest gas prices are projected to average under $3 a gallon for the summer driving season. Electricity demand is expected to increase, with a 2.9% increase in residential demand offsetting a 1.5% decrease in electric demand from the industrial sector. Natural gas consumption also is expected to increase 3.5% for 2025.
Here are projections from the MPSC’s Energy Security Section for energy supply and demand in Michigan for summer 2025.
ELECTRICITY
- If typical weather patterns hold, total electric sales are expected to increase 0.5% to 99.3 terawatt hours (TWh) in 2025, up from 98.8 TWh in 2024, driven by a 2.9% increase in residential demand, offset by a 0.1% decrease anticipated for the commercial sector and a 1.5% decrease for the industrial sector.
- Residential electric customers saw a weighted average rate increase from May 2024 to May 2025 of 8.4%, driven by broad inflationary pressures, higher fuel costs that increased power supply costs, and infrastructure investments.
NATURAL GAS
- Natural gas demand in Michigan is expected to rise 3.5% in 2025, owing in part to cooler average temperatures early in the year. Residential usage is expected to increase 14.7%, with commercial and industrial sector usage also rising 12.7% and 14.3% respectively. Demand for natural gas from the electric power sector, meanwhile, is expected to decline by 11.2% due to rising natural gas prices. Federal forecasts call for a 3.4% warmer summer than historical averages.
- The U.S. Energy Information Administration (EIA) expects Henry Hub natural gas prices to average $4.28 per thousand cubic feet (Mcf) for 2025, an 88% increase year over year, and then rise to an average of $4.98/Mcf in 2026.
- Natural gas storage levels in Michigan are projected to be about 413 billion cubic feet at the end of 2025, 19% lower than in 2024.
GASOLINE
- Michigan gasoline sales are expected to decline slightly, by about 0.78% in 2025 compared to the year before.
- According to AAA Michigan, the average price statewide for a gallon of regular unleaded gasoline on May 19, 2025, was $3.17, down 10.7% from the $3.55 per gallon cost of a year ago.
- The EIA projects Midwest regular-grade gasoline prices will average $2.98 per gallon during the April-September driving season, down from $3.34 per gallon in 2024. Midwest regular-grade gasoline prices are forecasted to average $2.94/gallon for all of 2025. However, unforeseen refinery outages, international political unrest, adverse weather conditions or other disruptions to supply could lead to higher product prices.
- National gasoline inventories are in the lower half of the 5-year range for this time of year. For the week ending May 9, U.S. total gasoline inventories were at 224.7 million barrels (25 days of supply), down 3.1 million barrels from the same date in 2024. Midwest inventories were at 48.4 million barrels, about 1.4 million barrels lower than last year.
PETROLEUM
- U.S. crude oil production averaged 13.21 million barrels per day (b/d) in 2024 and is expected to increase to 13.42 million b/d for 2025 and up to 13.49 million b/d in 2026.
- U.S. crude oil stocks are currently 15.2 million barrels lower than a year ago. As of May 9, 2025, the U.S. had 442 million barrels in inventory, a 3.3% decrease from 2024.
- The EIA projects that West Texas Intermediate crude oil will average $61.81/bbl for 2025 and $55.42/bbl in 2026.
DISTILLATE FUELS
- No. 2 heating oil prices ended the 2024-25 heating season at $3.02/gallon, 55 cents lower than the year before.
- The EIA expects retail prices for on-highway diesel fuel will average $3.49 per gallon for 2025, down $0.27 from 2024. The EIA projects distillate prices will rise slightly for 2026, with prices estimated to average $3.54 per gallon.
- According to AAA Michigan, the average price of diesel in Michigan was $3.47 per gallon on May 19, 2025, $0.39 per gallon lower than this time last year.
- For the week ending May 9, national inventories of distillate oil were 103.6 million barrels, about 12.8 million barrels lower year over year. Midwest inventories for the same week totaled 23.8 million barrels, 7.3 million barrels lower than 2024.
Resources are available for Michigan families needing help with home energy costs. The MPSC’s one-stop webpage for utility help provides information on financial assistance, payment plans, consumer protections and other options. For information, go to www.michigan/gov/mpsc/gethelp. Those having trouble paying home energy costs also may contact their electric or natural gas utilities for information or contact Michigan 211 by calling 211 or going to www.mi211.org. Michigan 211 is a free, confidential service that connects Michiganders with a broad range of assistance programs and services and other resources, including help with food, housing, transportation and home energy bills.
Energy assistance information also is available through the MPSC’s energy assistance consumer tip sheet. Utility customers also can help reduce their costs by using energy efficiently. The MPSC's consumer tip on beating the heat has suggestions on reducing energy use. The U.S. Department of Energy has additional spring and summer tips for saving energy.
For information about the MPSC, visit www.michigan.gov/mpsc, sign up for its monthly newsletter or other listservs. Follow the Commission on Facebook, Twitter or LinkedIn.
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