Israel Approves Fuel Subsidy to Mitigate Price Hike

Israel's Attorney General has approved a directive from the Finance Minister to subsidize gasoline prices by 50 agorot per liter for October. This measure aims to soften the impact of a significant price increase that took effect at midnight between Wednesday and Thursday, raising the price to a record high of 8.27 shekels per liter. The subsidized price, expected to be 7.77 shekels per liter, will take effect at midnight between Sunday and Monday and will remain in place until the end of October.

This marks the second consecutive month of subsidies, following a similar 50 agorot reduction in September. The previous subsidy expired at the end of September. The new subsidized price will be 2 agorot higher than the September subsidized price. The Finance Ministry is expected to formally sign the order, which will then be published for public comment before becoming effective.

The government subsidy for October is estimated to cost the state approximately 150 million shekels. This comes on top of the 155 million shekels spent on the September subsidy, bringing the total cost of fuel price subsidies in the two months leading up to the elections to over 300 million shekels.

The recent surge in gasoline prices is attributed to a roughly 13% increase in international gasoline markets, driven by rising oil prices and concerns over supply disruptions. Additionally, a 3% strengthening of the US dollar against the Israeli shekel in the past month has contributed to the higher prices in Israel. While a stronger shekel had previously offset global price increases for Israeli drivers, the recent weakening of the local currency has diminished this protective effect.