Gas prices to fall on Jan. 1

by Matt Hughes

JE NEWS EDITOR

On January 1, 2014 gas prices will be going down. It wont be a huge drop. In fact the average driver’s wallet might not even notice the decrease.

Kentucky’s “gas tax” on sales of gasoline, diesel and ethanol motor fuels will decrease by 1.5 cents per gallon on New Year’s Day, reflecting a drop in the calculated average wholesale fuel price.

According to the Kentucky Highway and Transportation Cabinent, the decrease would result in a loss to the Kentucky Road Fund of about $45 million on an annualized basis.

“The Road Fund is our source of revenue for building, improving and maintaining Kentucky roads and bridges, so any loss of revenue is concerning,” Kentucky Transportation Secretary Mike Hancock said Thursday.

The decrease of 1.5 cents per gallon brings the state impossed tax down to 25.9 cents. There also is a federal tax of 18.4 cents per gallon of gasoline, bringing the total tax to 44.3 center per gallon.

The excise tax was enacted in 1920. But in the 1980s, the Kentucky Legislature provided for a variable excise tax as a percentage of average wholesale price (AWP) of gas and diesel.

The variable excise tax rises, falls or stays unchanged from quarter to quarter on the basis of a survey of AWP of motor fuels. The survey is conducted by the Department of Revenue in the first month of each quarter (January, April, July and October) and the change in rate – if any – takes effect on the first day of the first month of the following quarter.

For purposes of the excise tax rate, the amount of any increase in the AWP is capped at 10 percent, per year.