Why Indiana Gas Prices Sometimes Dwarf Kentucky Gas Prices

Every time I cross Owensboro's Blue Bridge into Indiana, I'm gobsmacked by the gas prices. I don't know why; it seems it's always been that way. They're not just higher; in some cases, they're at least 30 cents higher. I always make sure I fill up if I'm going to be spending any length of time in the Hoosier State.

Gas Prices in Indiana vs. Kentucky

The skyrocketing gas prices of 2008 and 2022 are still fresh in my mind, and when I see numbers that are above $3.00/gallon, I take notice. In Kentucky, we haven't forked over that much in a very long while. At this writing, Gas Buddy tells me that the ten cheapest gas prices in the Commonwealth are below $2.50, and a majority of those locations are in Western Kentucky. That's about 30 or more cents per gallon lower than the state average of $2.79. And, at the moment, that's 14 cents lower than Indiana's average of $2.93. In Southern Indiana, however, I am routinely seeing those $3.00+ prices.

Why Indiana Gas Prices Are Higher Than Kentucky Gas Prices

After all this time, it was high time to learn why you pay so much more when you cross the Ohio River. If you turn it into a guessing game, I bet you get it right the first time.

And you guessed it. It's all about taxes. In 2022, AAA spokesman Nick Chabarria told the Evansville Courier & Press that, even though gas price differences won't exactly match the separation between the states' fuel taxes (at the time, 32 cents per gallon in Indiana versus 26 cents in Kentucky), we should always expect to pay less for gas in Kentucky. That point was driven home (no pun intended) by Indiana gas prices soaring above the national average that summer.

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Indiana Fuel Tax vs. Kentucky Fuel Tax

In 2025, Indiana's fuel tax has grown to 35 cents a gallon while Kentucky's has only inched up to 26.4 cents a gallon, and that could explain even wider gaps in prices.

Distribution/supply costs, retail competition, and operating costs are also factors in such a disparity.

LOOK: See how much gasoline cost the year you started driving

To find out more about how has the price of gas changed throughout the years, Stacker ran the numbers on the cost of a gallon of gasoline for each of the last 84 years. Using data from the Bureau of Labor Statistics (released in April 2020), we analyzed the average price for a gallon of unleaded regular gasoline from 1976 to 2020 along with the Consumer Price Index (CPI) for unleaded regular gasoline from 1937 to 1976, including the absolute and inflation-adjusted prices for each year.

Read on to explore the cost of gas over time and rediscover just how much a gallon was when you first started driving.

Gallery Credit: Sophia Crisafulli