Fuel Price Discrepancy Hurts Transportation Sector, Advocates Say
Translated & summarized from Maariv by baba
The story in 5 lines · by baba
- Diesel fuel prices have risen nearly 59% since 2025, impacting student and soldier transport.
- Government reduced gasoline tax but excluded diesel, creating a price disparity.
- The transportation sector faces increased operating costs and potential financial instability.
- Industry group urges tax relief or price adjustment mechanisms from the Finance Minister.
- Over 500 companies and 25,000 workers are affected by the policy.
The Israeli transportation sector, responsible for moving students, soldiers, and workers, is being unfairly disadvantaged by recent government fuel policies, according to an industry organization. While gasoline prices were reduced by 50 agorot per liter through a decrease in excise tax effective October 5, 2026, diesel fuel, used by buses and transport vehicles, was excluded from this relief. The organization argues this distinction "discriminates against the industry that transports the country's children and soldiers" and threatens the stability of dozens of companies and the jobs of thousands of employees.
Data from the organization indicates a significant rise in diesel prices. The price of diesel fuel at the refinery gate in September 2026 was 3.26 shekels per liter, a substantial increase from the 2025 average of 2.05 shekels per liter, marking a nearly 59% jump. The price peaked in April 2026 at 3.66 shekels per liter. This price is subject to a 3.37 shekel per liter excise tax.
Following the cancellation of the diesel excise tax rebate for buses in January 2026, the organization claims the effective cost of diesel for operators, before VAT, rose from an average of approximately 5.15 shekels per liter in 2025 to about 6.63 shekels per liter in September 2026. This represents an approximate 29% increase in actual fuel costs. Given that fuel constitutes about 40% of operating expenses for transportation companies, this diesel price hike alone adds approximately 11.5% to their total operating costs, potentially eliminating profits in an industry with already low margins.
The organization is particularly concerned about student transportation tenders, where the standard contract terms do not allow for price adjustments due to increased costs over the three to four-year contract period. This leaves the full burden of diesel price increases on the operators. The organization has appealed to the Minister of Finance, Bezalel Smotrich, requesting either an immediate reduction in the excise tax on diesel for transportation, similar to the benefit given to gasoline, or the reinstatement of the diesel excise tax rebate for buses. They also seek a mechanism to link student transportation tender prices to diesel costs starting from the 2027-2028 school year and a one-time adjustment for existing contracts to account for the diesel price increase since April 2026.
The association represents over 500 private transportation companies, operating approximately 22,000 vehicles and employing over 25,000 drivers and workers. A response from the Ministry of Finance was not yet available.
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