Fuel Prices Set to Drop Next Week Following Tax Cut

The price of gasoline in Israel is expected to decrease at the beginning of next week, following a move by the Ministry of Finance to reduce excise tax on gasoline by 50 agorot per liter. The ministry published the order for public comment, and after the comment period closes on Sunday, Finance Minister Bezalel Smotrich is expected to sign it into effect. If approved, the price reduction will take effect at midnight between Sunday and Monday.

This comes after the price of gasoline reached a 14-year high of 8.25 shekels per liter (self-service, including VAT) on September 1st, an increase of 16 agorot from the previous month. The recent surge has been keenly felt by drivers, and the anticipated reduction could bring the price back below the 8-shekel mark.

If the full reduction is implemented, the price is projected to fall to approximately 7.75 shekels per liter. For regular drivers, this could translate to savings of tens of shekels per month, depending on their fuel consumption. This move aims to provide immediate relief to consumers who have been impacted by the recent price hikes.

However, the relief may be temporary due to ongoing volatility in the global energy market. Recent military developments in the region and U.S. actions against Iran have increased uncertainty surrounding oil prices. Any future rise in global oil prices could subsequently affect gasoline prices in Israel, despite the tax reduction.

Gasoline prices in Israel are influenced monthly by benchmark European prices, the dollar exchange rate, and taxes. A significant shift in global energy prices can quickly impact local pump prices. This was evident in September when, despite expectations of a price decrease due to falling oil prices, the final price actually rose due to a combination of market prices, the dollar exchange rate, and taxes.