What Higher Fuel Prices are Really Costing You

This analysis combines estimates and forecasts of motor fuel purchases and price increases to calculate the added fuel expense triggered by the start of the Iran War on February 28, 2026. It is based primarily on publicly available data published by the U.S. Energy Information Administration (EIA), the Federal Highway Administration (FHWA), and the U.S. Census Bureau.

Motor Fuel Purchases

Each week, the EIA estimates the number of barrels of gasoline and distillate fuel oil supplied to Americans, a tally that approximately represents final consumption of these products. We first use these figures to create daily estimates of fuel purchases from February 28 through the present. We then forecast future purchase levels through the end of the year based on the historical average monthly percentage change in product supplied in each category during the 2021-2025 period.

The focus of this analysis is motor fuel costs rather than energy cost more broadly. We therefore include all of the gasoline portion of the EIA estimates, but for distillate fuel oil we remove the non-motor fuel portion to arrive at an estimate of diesel fuel gallons purchased. This is achieved by adjusting the weekly distillate fuel supply figures downward based on the historic ratio of distillate fuel consumed in the transportation sector to distillate fuel consumed more broadly, as observed in the EIA’s 2021-2025 monthly data. These data suggest that non-transportation fuel oil consumption reaches a peak of 37 percent of all distillate fuel oil consumption in the winter months, and a low of 15 percent of such consumption in the summer months.

We next use data from the U.S. Department of Energy’s Federal Energy Management Program (FEMP) and the U.S. Department of Defense (DOD) to estimate the amount of motor fuel purchased abroad by the federal government and add this to our total purchase amounts.

With aggregate motor fuel purchase data now in hand, we then disaggregate those purchases across states, regions, and purchaser types using FHWA data on motor fuel use by state and use type in 2024, the most recent year available. FHWA reports fuel use by state separately for three categories of users: private and commercial (or business) purchasers, state and local governments, and the federal government to the extent such use is by civilian employees for on-highway purposes.

Because we rely on FHWA data for our state and regional disaggregation by purchaser type, our federal government results for these geographies only include civilian on-highway use. Our national totals, on the other hand, utilize the FEMP and DOD data described above to arrive at comprehensive purchase totals that reflect both civilian and military use of gasoline and diesel fuel, both on and off-highway.

To calculate the impact on individual consumers, we disaggregate the combined private and commercial grouping into separate amounts for each purchaser type. For gasoline, we estimate that 90 percent of on-highway consumption is by individuals based on our review of information reported by various industry sources; the remainder is attributable to businesses. For diesel fuel, we use data from the U.S. Department of Energy’s Alternative Fuels Data Center on vehicle registrations by fuel type to derive state-level estimates of the share of diesel fuel consumed by individual drivers as opposed to trucking companies and other commercial entities.

Motor Fuel Prices

Estimating the impact of higher motor fuel prices requires developing two sets of price data: one reflecting actual and projected prices based on current trends, and another examining a counterfactual scenario where the Iran War did not occur and fuel prices since late February instead varied in accordance with their typical seasonal pattern.

To derive the counterfactual baseline, we start from the EIA’s pre-war retail price data for gasoline and diesel fuel and allow for weekly prices to adjust in line with the average week-to-week price change seen during the equivalent weekly period in each of the last 10 years with usable data (we exclude 2020 from this calculation because of the COVID-19 pandemic’s idiosyncratic effects on fuel prices that year). This baseline is calculated separately for each region available in the EIA data as seasonal patterns vary in different parts of the country. The most important consequence of considering seasonal variation is that it allows us to account for the fact that gasoline prices would likely have risen somewhat from their late-February trough even absent the war, largely because of seasonal increases in demand, though it is clear that the price increases triggered by the war have gone far beyond what can be attributed to normal seasonal patterns.

We then compare this baseline to the EIA’s actual retail price for gasoline and diesel fuel, reported on a weekly basis, and we interpolate between those weekly values to arrive at daily average prices. For forecasting purposes, we assume that the current degree of elevated prices—measured as the average price increase observed during the two most recent periods reported in the EIA weekly data—will persist for the forecast period in question.

One complicating factor is that the EIA reports its gasoline and diesel fuel price data at different levels of geographic detail.

For gasoline, the EIA data are reported at the national level, for nine select states, and for eight regions. These are the geographic areas that we therefore include in our analysis.

For diesel fuel the EIA price data are available for the same national and regional geographies as the gasoline data, but state-level data are only reported for California. In the other eight states, we therefore apply the diesel price increase trajectory seen for that state’s region in the EIA data, and we scale it to each state’s particular experience using an adjustment factor based on our review of point-in-time, state-level diesel price data reported by other sources.

Individualized Impacts

Our analysis also reports added cost figures on the individual and household levels to offer readers a better understanding of how Americans are experiencing these higher expenses.

Population counts for the per-person impact measures are constructed by aging the U.S. Census Bureau’s state population estimates for 2025 with a national growth factor derived from the Congressional Budget Office’s (CBO) population projections.

Driver counts are then constructed by scaling each state’s population count using FHWA data on the share of residents in each state who were licensed drivers in 2024.

Finally, household counts are derived by growing the household counts found in the U.S. Census Bureau’s American Community Survey for 2024 based on Census and CBO population data and projections.