Energy ETFs in Spotlight With Gasoline Price Predicted to Drop in 2026

Per a recent projection by the U.S. Energy Information Administration (“EIA”), U.S. gasoline prices will decline 6% in 2026. While lower prices at the pump come as a much-needed breather for U.S. consumers, who are already struggling with high inflation, they create a complex ripple effect for the energy sector, particularly for oil companies.

In a similar vein, Goldman Sachs projected earlier this month that global oil prices will likely trend lower this year, reflecting a supply-driven market surplus, even as geopolitical risks related to Russia, Venezuela, and Iran are expected to sustain price volatility (as cited in a Reuters press release).  

The expected decline in pump prices, primarily following lower crude oil prices, puts a strategic spotlight on Energy exchange-traded funds (ETFs). As profit margins for upstream producers often correlate with fuel prices, investors are likely to focus on energy ETFs, which are expected to serve as a primary vehicle for navigating a year in which traditional “big oil” returns may face headwinds from a cooling commodities market, amid an increasingly complex global energy landscape.

Reasons Behind the Price Decline

According to the EIA’s January 2026 Short-Term Energy Outlook, the forecast for lower prices is driven by a combination of global and domestic factors.

•    Falling Crude Oil Prices: The EIA notes that retail gasoline prices generally follow the path of global crude oil. It reported that crude oil prices fell in 2025 amid an oversupplied global market, a trend expected to continue this year as well. Supporting this outlook, Goldman Sachs predicted Brent crude to average around $56 per barrel in 2026 due to a "supply wave" from long-cycle projects.

•    Refining Capacity Dynamics: The EIA points out that decreasing U.S. refinery capacity, especially on the West Coast, may offset some of the effects of lower crude oil. This regional supply tightness on the West Coast, while a burden for local consumers, may bolster the profit margins of remaining refiners.

Furthermore, the EIA has noted that increasing fleet-wide fuel economy and robust EV sales are structural dampeners on domestic demand. 

For energy companies, this environment creates a split impact. For integrated oil majors like Exxon Mobil XOM and Chevron CVX with large upstream (exploration and production) divisions, lower realized oil prices put downward pressure on their margins. In contrast, refining giants like Marathon Petroleum MPC, Valero Energy VLO or Phillips 66 PSX may actually see a margin cushion. As crude oil prices drop faster than retail gasoline, the resulting 'crack spreads' are projected by the EIA to remain resilient or even expand, offering a defensive play within Energy ETFs.

What Should an Investor Do Now?

In addition to the gasoline price drop prediction, recent geopolitical tensions have made the energy investment landscape further complicated, with a developing trade dispute between the United States and the European Union over green technology and critical minerals sourced from Greenland, adding new uncertainties to the sector. 

While today’s Davos Economic Forum offers a "sliver of hope" for de-escalation, the transatlantic geopolitical friction makes broad Energy ETFs more attractive than individual stocks; they provide a buffer against localized disruption.

Investors holding onto these ETFs should remain protected against short-term market upheavals because many constituent companies, such as TotalEnergies TTE, are not just mere "oil companies" — they are diversified energy giants with massive footprints in low-carbon energy resources, shielding them from temporary price dips in gasoline.

Energy ETFs in Spotlight

Against the current backdrop, as mentioned above, the following energy ETFs demand an immediate spotlight on them:

State Street Energy Select Sector SPDR ETF XLE

This fund, with assets under management (AUM) worth $29.35 billion, offers exposure to 22 companies from the oil, gas and consumable fuel, energy equipment and services industries. Its top 10 holdings include XOM (23.99%), CVX (18.00%), VLO (3.74%), PSX (3.72%) and MPC (3.53%). 

XLE has gained 7.2% over the past year. The fund charges 8 basis points (bps) as fees.  

Vanguard Energy ETF VDE

This fund, with net assets worth $7 billion, offers exposure to 107 companies whose businesses are dominated by either of the following activities: the construction or provision of oil rigs, drilling equipment, and other energy-related service and equipment; or the exploration, production, marketing, refining, and/or transportation of oil and gas products. Its top 10 holdings include XOM (22.87%), CVX (15.02%), PSX (2.71%), MPC (2.66%) and VLO (2.63%). 

VDE has rallied 6.8% over the past year. The fund charges 9 bps as fees.  

iShares Global Energy ETF IXC

This fund, with net assets worth $2 billion, offers exposure to 50 companies that produce and distribute oil and gas. Its top five holdings include XOM (18.86%), CVX (10.84%) and TTE (4.60%). 

IXC has soared 13.3% over the past year. The fund charges 40 bps as fees.  

VanEck Oil Refiners ETF CRAK

This fund, with net assets worth $69.3 million, offers exposure to 30 companies involved in crude oil refining that may include gasoline, diesel, jet fuel, fuel oil, naphtha and other petrochemicals. Its top five holdings include PSX (7.57%), VLO (6.66%) and MPC (6.31%).

CRAK has surged 40.7% over the past year. The fund charges 62 bps as fees.  

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