One year ago, average gas prices in Kentucky hovered around $2.85.
By the end of this past Memorial Day weekend, the average had jumped to $4.31.
It’s a 51% increase caused by a myriad of factors. A global pandemic throttled petroleum production and its demand, and rapid recovery has pressed supply. Geopolitical strife, particularly between Russia and Ukraine, has destabilized the oil market. Policies from the nation’s capital — including the denial of price gouging and the freezing of offshore and onshore leases — have both directly and indirectly flexed costs.
During his Thursday “Team Kentucky” update, Gov. Andy Beshear announced the only measure he believes his office can make at this juncture, by issuing an emergency regulation to freeze the state’s gas tax at 26 cents until January 1, 2023.
Without this action, Beshear said state statutes would’ve triggered a 2-cent increase to 28 cents effective July 1, and such a measure needed to be prevented.
Beshear noted the original statute was written in expectations of slowly graduating petroleum prices, and not large spikes in the commodity.
While two cents per gallon sounds minuscule in the grand scheme, Beshear said this measure should ensure more than $35 million in savings statewide until January 1, 2023 — when the Kentucky General Assembly will reconvene and can discuss further cost-cutting measures.
The savings, Beshear said, will be felt not just in homes, but in municipalities.
A two-cent cut will create a 1.6% decrease in the current Department of Transportation Cabinet’s budget. But with one of its healthiest budgets in a while, Transportation Cabinet Secretary Jim Gray said the move will have no material impact on any planned or ongoing transportation projects in the Commonwealth.
Beshear further noted that he’s submitting a letter to Attorney General Daniel Cameron for advice in declaring a state of emergency, in order to activate a price-gouging statute. He also said he plans to address the Kentucky General Assembly in January, in order to discuss the transportation budget.
On average, taxes account for roughly 12% of a gas price.
