Israel to Cut Fuel Prices by Half a Shekel Amid Tax Reduction

The price of gasoline in Israel will decrease by half a shekel per liter starting at midnight between Sunday and Monday, bringing the cost of 95-octane gasoline to NIS 7.75. This reduction follows a recent surge that pushed prices to a record high of NIS 8.25.

The price cut is enabled by a decision from Finance Minister Bezalel Smotrich to reduce excise taxes on fuel, a significant component of the final price. This move was approved by legal advisors, allowing for the price adjustment.

Initially, there were concerns that the reduction might not be approved due to a directive stating the current government operates as a caretaker administration, limited in its non-urgent powers. However, the Treasury's legal advisor, Dudi Kofel, argued that the high fuel prices constituted an urgent matter. He also noted that this reduction is smaller in scope and duration compared to a similar excise tax cut implemented during the 2022 election period.

Smotrich will sign the order, leading to the updated price at the pump. The background for this decision includes sharp increases in gasoline prices over the past eight months, partly attributed to the conflict with Iran, the closure of the Strait of Hormuz, and rising natural gas prices in Europe. The regulated price of gasoline rose from NIS 6.85 in January to the recent peak of NIS 8.25 in September.

The price reduction will apply only to regulated gasoline, not to diesel or LPG, whose prices are not controlled.