Gas prices in Kentucky are about to go up. Here's when and why

Kentuckians will soon see higher price tags at the fuel pump.

Starting July 1, gas will increase by 2.1 cents per gallon due to the expiration of Gov. Andy Beshear’s June 2022 emergency regulation that froze the motor fuel tax across the Commonwealth.

“I want Kentuckians to understand this process because it impacts us all at the pump,” said Gov. Beshear in a Team Kentucky update in May. “We are doing everything we can to try to help keep more money in the pockets of our hard-working Kentucky families and to provide some relief in these challenging times.”

Nationally, regular unleaded gasoline averaged $3.573 per gallon according to AAA on June 26. In Kentucky, the average price per gallon for regular unleaded gas was 24 cents less at $3.333.

However, several counties are already experiencing higher than national gas prices at the pump. In Jefferson County, the average price is $3.813, while Oldham County is $3.73 and Shelby County is $3.614 (as of June 26).

Meanwhile, the western part of the state has multiple counties below $3 per gallon. Bell County had the lowest average gas price in the Commonwealth at $2.97 per gallon.

Here’s what we know about the gas tax increase.

What is the gas tax?

The motor fuels tax — gas tax — is a tax on gasoline and other combustible fuels and liquids that could be used to fuel motor vehicles.

This tax revenue goes to the Kentucky Road Fund and supports road construction and maintenance across the state. In June 2022, a press release from the governor’s office noted that the gas tax freeze would decrease Road Fund revenue by 1.6% but to remedy this loss, the governor planned to use funds from the General Fund.

Laura Goins, the Deputy Chief of Staff for Media Relations for the Office of the Speaker, noted the 2.1 cent per gallon savings would be equivalent to "less than a quarter per fill up for most consumers." Goins said members of the House Majority Caucus had concerns about the "extremely negative impact" a long-term suspension would have on the Road Fund.

Why did the emergency regulation gas tax freeze expire?

The emergency regulation gas tax freeze expired because the General Assembly failed to take action prior to the Feb. 27 expiration date.

In June 2022, Governor Beshear signed an emergency regulation following the jump in Kentucky gas prices to more than $4 per gallon.

“Freezing the average wholesale price of gasoline … will help protect Kentuckians from the harm a higher gas tax would bring on top of other negative effects of rising inflation,” the governor wrote in the emergency regulation.

The emergency regulation was filed in direct response to meet an “imminent threat to the public health, safety or welfare” and had to be temporary in nature.

In January, Beshear wrote a letter to House and Senate leadership alerting them the gas tax freeze would expire on Feb. 27. House Minority Leader Derrick Graham filed House Bill 89 on Feb. 23 which included language to maintain the gas tax freeze through June 30, 2024.

Gas Tax-Letter to Leadershi... by Courier Journal

The General Assembly failed to take action to prevent the expiration of the emergency regulation and they did not pass HB 89.

On Feb. 28, a day after the emergency regulation expired, Beshear once again wrote a letter to House and Senate leadership to inform them of the expiration which would allow a two-cent gas tax increase in March and a second gas tax increase of 2.1 cents July 1.

"Members of the House Majority Caucus are committed to enacting tax policies that benefit all Kentuckians," Goins said. "In addition, there is no way to guarantee the savings reach Kentuckians since anyone who purchases gasoline pays the tax, so a considerable proportion is levied on those traveling to and through the Commonwealth."

Gas Tax Letter to the Gener... by Courier Journal

The governor estimates the emergency regulation helped Kentuckians save up to $35.4 million through January 2023. The estimated savings were derived from an estimation of gas consumption and the 2-cent savings from the freeze and was calculated by the Office of the State Budget Director.

"Lawmakers will continue to monitor as the statutorily required increase is implemented and potentially take the issue up again in January," Goins said.

This story may be updated.

Contact reporter Olivia Evans at oevans@courier-journal.com or on Twitter at @oliviamevans_

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This article originally appeared on Louisville Courier Journal: Kentucky gas prices increasing