Gas price surge hitting low-income households hardest, Fed study finds

• Nominal gasoline spending rose over 15% in March 2026, with prices hitting a four-year high after the Strait of Hormuz closure disrupted about 20% of global oil supply
• Low-income households cut real gas consumption by 7% while increasing nominal spending by only 12%, compared to high-income households which reduced consumption by just 1% but increased spending by 19%
• The K-shaped consumption pattern was more pronounced than during the 2022 Russia-Ukraine war price spike, with lower-income households likely carpooling or switching to public transit

Summary

A Federal Reserve Bank of New York study reveals that recent gas price surges have disproportionately impacted low-income households, creating a K-shaped consumption pattern across income levels.

Key Facts:

Energy prices reached a four-year high in March 2026 following the Iran war and closure of the Strait of Hormuz, a critical passage for approximately 20% of global oil supply. Nominal gasoline spending jumped over 15% in March, rising from 10% below 2023 levels to 5.5% above. The Advance Monthly Retail Trade Survey reported gas station spending increased 14.5% during the same period, while real gasoline consumption declined 3%.

Income-Based Disparities:

• Low-income households: Increased nominal spending by just 12% (the least among groups) but cut real gas consumption by 7% (the most), likely through carpooling or switching to public transit
• High-income households: Increased nominal spending by 19% (the most) while reducing real consumption by only 1%, maintaining pre-war consumption patterns largely unchanged
• Middle-income households: Experienced moderate increases in nominal spending and decreases in real consumption

Market Implications:

The study, using data from analytics firm Numerator, shows the K-shaped consumption pattern has "opened up much more than before" compared to the 2022 oil shock following Russia's Ukraine invasion. This widening gap indicates growing economic disparity in how different income groups absorb energy price shocks, with potential implications for consumer spending, inflation sensitivity, and economic inequality trends.