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Pain at the pump | Kentucky economists weigh in on skyrocketing gas prices

Economists say, like many countries, the decision to stop taking imports from Russia is causing a major price spike, but that remedies could be on the horizon.

LOUISVILLE, Ky. — Gas prices in Kentucky are reaching record highs when it comes to averages.

Just last year AAA reported prices in the Commonwealth averaged just over $2.90, today it sits at over $4.60 on average per gallon, with prices in Louisville metro being even higher.

But what exactly could be the cause of these steep price hikes?

"It's incredible, I can't imagine how people are affording to do it, I just paid $4.80 a gallon and I put 14.6 gallons in so $70," Bob Brown of Louisville said.

Prices many people are having to come to terms with.

Governor Andy Beshear now announcing he is going to freeze a two cent per gallon gas tax increase expected to take place in July.

"It would help but it's not much help," Brown said.

The Louisville Metro is seeing prices at nearly a dollar more a gallon than where it was a month ago and almost a full two dollars more today than a year ago.

But what's the cause and when will it end?

"I think as long as we have the conflict with Ukraine and Russia, we're going to continue to see these higher gas prices," Dr. Jose Fernandez, UofL Economics Department Chair, said.

Dr. Jose Fernandez is the chair of the Economics Department at the University of Louisville.

He says, like many countries, the decision to stop taking imports from Russia is causing a major price spike, but that remedies could be on the horizon.

"One of the things that President Biden is actually trying to do. And he's actually heading over to visit the OPEC nations to see if he can convince them to increase their production. That's the largest source of oil on Earth right now," Dr. Fernandez said.

Both Dr. Fernandez and Dr. Ken Troske, the chair of economics at the University of Kentucky, says a lot of it comes down to OPEC, the Organization of the Petroleum Exporting Countries.

"Neither the United States nor OPEC is producing the same levels they did last year at the same time. So with lower production, lower accessibility to oil that only pushes gas prices, and in this case, oil higher and higher," Dr. Fernandez said.

"OPEC is a big deal. So depending on how OPEC feels, that's going to affect all of us more than almost anything any other entity does," Dr. Troske said.

The freeze on the July gas tax increase is expected to save Kentuckians an estimated $35.4 million.

But, when you're at the pump, economists say you may not notice the change. 

"A bigger move would have been to freeze the entire tax. But even that it's not that great. In Kentucky. Before the freezing of the tax, it would have been around 26 cents. So you still would only be saving 26 cents a gallon. It's not going to bring it below four," Dr. Fernandez said.

Both Fernandez and Troske said with the rate at which prices are moving right now, other problems like the inflation of food, housing and other necessities are already proving to be issues.

► Contact reporter Ford Sanders at FSanders@whas11.com on FacebookTwitter or Instagram.  

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