How Have Fuel Prices Changed for Fifth District Consumers

Regional Matters

July 16, 2026

Introduction

Recent supply shocks from the conflict in the Middle East have increased fuel prices across the United States and the Fifth District, but the impact is not uniform. Within the Fifth District, consumer gas prices have long been the highest in Washington, D.C., and the lowest in South Carolina. From June 2025 to May 2026, prices increased the most in Washington, D.C., and West Virginia.

Although prices decreased across the nation through June, these decreases affected states unevenly. For example, within states and jurisdictions, gas prices have differed. Prices increased more in metro areas in the Carolinas and Virginia than they did outside of metro areas. Depending on consumers' ability to change their fuel consumption, sustained fuel price increases can drive up household transportation costs.

What Drives Higher Gas Prices Across States?

A major driver of fuel price shocks in recent months is the cost of crude oil. Since the Strait of Hormuz closed in the spring, the price reached a high of nearly $140 per barrel on April 7, 2026. This is more than double the 2025-2026 low of $59 per barrel from Dec. 16, 2025.

Outside of the overall cost of crude oil, there are several reasons gas prices differ across states and localities. State excise taxes on gas and diesel, which can range between 9 cents and 71 cents per gallon, have a large impact on cost differences at the pump from one area to another. Within the Fifth District, Washington, D.C., and West Virginia have the lowest gas tax (36 cents per gallon), and Maryland has the highest gas tax (47 cents per gallon). Additionally, pipeline capacity and price structure influences consumer gas prices, with some regions facing local supply limitations that can drive prices up. Finally, consumer demand, retail competition, and the proximity of other gas stations are particularly salient drivers of gas station prices.

Prices Increased Most in D.C., and West Virginia, But Recent Declines Are Uneven

Among Fifth District states and jurisdictions, average gas prices range from a high in Washington, D.C. - which notably has the lowest tax rate - to a low in South Carolina. Not only has this remained true, but in the last few months, the gap has widened. Prior to the oil price spike, there was a $0.37 gap in regular gas prices at the pump; as of late June, it had expanded to $0.67 - an 81 percent increase.

The gap between the two states for diesel grew even more substantially, from $0.21 in June 2025 to $1 in June 2026.

Although fuel prices have decreased both nationally and within the Fifth District, these decreases have not been uniform. Across all Fifth District states and jurisdictions, the price for diesel increased more than it did for regular gas. However, for both fuel types, Washington, D.C., and West Virginia experienced the largest increases from June 2025 to June 2026. Though West Virginia's recent 13 percent decrease in regular gas prices is slightly lower than other states (besides D.C.), it has seen the largest decrease in diesel prices (13 percent from May 2026 to June 2026). Washington, D.C., however, has experienced the smallest decline in price for both regular gas and diesel (10 percent and 6 percent, respectively), despite increasing the most initially (28 percent for regular gas and 50 percent for diesel).

Price Increases Can Impact Consumers Differently Across Geographies

Of course, drivers are adjusting: In an April 2026 poll from Ipsos, ABC News, and The Washington Post, 44 percent of respondents claimed they would be adjusting their driving habits in response to price changes. However, as the Dallas Fed noted during a similar fuel spike in 2022, U.S. fuel consumption does not tend to decrease substantially. In other words, people simply have to pay more. A recent Richmond Fed article estimated that if recent price increases persist, they will cost the average U.S. consumer about an additional $847.71 per year.

Within the Fifth District, there are fewer drivers in Washington, D.C., and West Virginia compared to other Fifth District states, and their vehicles are often driven less. This means that although their prices increased the most, they likely purchase less fuel on average than consumers in other Fifth District states. On the other hand, West Virginia has a higher percentage of vehicles that use diesel than all other Fifth District states and the United States overall (3.1 percent versus 2.4 percent, respectively); therefore, diesel price increases may have hit these consumers particularly hard.

North Carolina and Virginia have the highest number of vehicles registered on the road, but South Carolina drivers travel an average of 1,000 more miles per year than Virginia drivers. This means that even if the average gas price increased more in Virginia, drivers in South Carolina may have felt a greater impact on their transportation expenses. These driving characteristics can create demand differences that may also explain some price differences across states.

Prices Increased More in Select Metro Areas Than in Their Respective States

Gas prices can also vary across local areas, such as metropolitan statistical areas (MSAs or metros). In fact, several metros within the Carolinas experienced steeper increases in regular gas prices than these states did on average. According to AAA data, the Asheville, N.C., Myrtle Beach, S.C., and Aiken, S.C., MSAs all saw an increase in prices at the pump that were up more than 25 percent from June 2025 to June 2026, compared to the 21 percent increases in North Carolina and South Carolina state averages. South Carolina drivers in these areas may experience particularly high increases in their transportation expenses, as the 2024 American Community Survey indicates that drivers in these areas tend to have commutes longer than 30 minutes.

Meanwhile, diesel prices in several Virginia metros - Lynchburg, Norfolk and Charlottesville - rose more than the statewide average, all exceeding 36 percent.

Conclusion

Most U.S. households experienced an increase in gas prices in the last few months, but that difference varies across states. The difference in the cost of gas between Washington, D.C., and South Carolina - the Fifth District jurisdiction and state where drivers spend the most and least to fill their tanks, respectively - has widened. Recent decreases also look different across areas, with Washington, D.C., experiencing less decline than other Fifth District states. Even within states, this can differ: Several metro areas in the Carolinas pay more for gas than the state average; for diesel, Virginia experiences a similar pattern in Virginia metros.

Views expressed are those of the author(s) and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.