When Lack of Government Authority is the Emergency, a Kentucky Story

Federal and state governments declare emergencies or disasters for many reasons. Currently in Arizona an estimated 25 emergency or disaster declarations are in effect. Most common reason in Arizona right now are wildfires, major storms and flooding, and a few continuing Covid declarations. Arizona has both a Covid 19 emergency declaration and a Covid 19 major disaster declaration. A FEMA dataset shows 838 emergency and disaster declarations across the U.S., though not all remain active.

Emergency declarations trigger a number of steps to facilitate government actions like disbursing funds and making it easier for state and federal responses to coordinate responses. In most states with laws prohibiting price gouging typically declaration of an emergency triggers application of the law.

Which brings us to Kentucky.

On June 23, 2022, Kentucky Governor Andy Beshear declared a “state of emergency relating to inflation and gas prices” so as to “implement provisions of KRS 367.372, et seq. as to the sale of goods and services, specifically gasoline or other motor fuels…” The declaration makes clear that all the emergency declaration is intended to do is activate the price gouging authority of the state. In other words, the emergency was the inability of the state to retroactively penalize gasoline retailers for price increases.

Average Gasoline Prices (Regular) for Ohio, Kentucky, and Tennessee, June 6-July 5, 2022

We might notice that prices had peaked about two weeks before the Governor declared the emergency and that prices have continued to fall in the nearly two weeks since. The price gouging law remains in effect only for 15 days unless extended. The enacting of state authority appears to have had no effect so far, as prices in Kentucky track the fall in prices in neighboring states.

As the law prohibits prices “grossly in excess of the price prior to the declaration” (Ky. Rev. Stat. § 367.374), permits prices to rise with fluctuations in commodity markets, and allows for other cost increases, it seems wholly unlikely the law will have any economic effect or legal consequences at all. In fact, that may be just fine with the Governor.

The real emergency in Kentucky was political, not economic. Consumers are unhappy about high gasoline prices. Understandably so; even after adjusting for inflation prices have been at record levels. Unhappy consumers are unhappy voters. Unhappy voters want to see elected officials do something. The Governor did something, and next time he is running for office he can remind voters that he did.

Of course he’ll leave out the part his “something” had absolutely zero effect and he expected it to have zero effect. The news release was the point. Governor Beshear wants voters to know he is “on their side.” Empty symbolism is good enough for Kentuckians in the Governor’s eyes.