Same Shock, Different Roads? A K‑Shaped Pattern at the Pump

Chakrabarti, Rajashri; Pham, Thu; Pierce, Beckett; Pinkovskiy, Maxim L.

doi:10.59576/lse.20260506

Discussion Paper

Same Shock, Different Roads? A K‑Shaped Pattern at the Pump

Abstract: In March 2026, energy prices surged to a four-year high, driven by the Iranian closure of the Strait of Hormuz amid the ongoing conflict in the Middle East. In this Liberty Street Economics post, we use the new consumer spending module of the Economic Heterogeneity Indicators to analyze recent changes in nominal and real gas consumption across different income groups. We find that households had very different experiences with gasoline spending: in March, high-income households increased nominal spending the most and kept real consumption essentially unchanged, while low-income households decreased real consumption of gasoline but still saw sharply increased nominal spending because of the rise in gas prices. Therefore, with the sharp increases in gasoline prices in March, a K-shaped pattern in gasoline consumption emerged—showing faster consumption growth for high-income households relative to low-income households. These gasoline consumption patterns qualitatively match those following the increase in energy prices at the beginning of the Russia-Ukraine war in spring 2022, even though the gap in consumption trends during the current episode is quantitatively larger.

JEL Classification: D31; Q41;

https://doi.org/10.59576/lse.20260506