Fuel Prices to Drop Briefly Before Sharp Rise Next Week
Translated & summarized from Haaretz by baba
Israeli gasoline prices will drop to 7.35 shekels per liter on Sunday but are expected to jump to 8.35 shekels by Thursday, November 5. The initial decrease is due to a temporary tax reduction order expiring. The subsequent rise is linked to global supply chain issues and the expiration of the tax cut, which costs the state 360 million shekels monthly. The International Energy Agency predicts continued price increases.
The story in 5 lines · by baba
- Fuel prices will drop to 7.35 shekels per liter on Sunday but rise to 8.35 by Thursday.
- The price increase is due to the expiration of a one-shekel-per-liter tax reduction.
- Finance Minister Bezalel Smotrich had previously signed orders to lower fuel taxes.
- The tax cuts have cost the state treasury approximately 360 million shekels per month.
- Global supply chain disruptions are contributing to rising fuel prices.
The price of gasoline in Israel is set to decrease to 7.35 shekels per liter for self-service starting Sunday, following a reduction in fuel taxes. However, this relief is expected to be short-lived, as prices are projected to surge to 8.35 shekels per liter by Thursday, November 5. This increase is attributed to the expiration of a tax reduction order signed by Finance Minister Bezalel Smotrich in early October. The order had previously reduced excise and VAT taxes on fuel by one shekel per liter.
Gasoline prices in Israel are regulated and determined monthly by the Ministry of Energy, based on average Mediterranean gasoline prices and the dollar exchange rate. Recent months have seen rising refining margins, caused by global supply chain disruptions, including issues at the Strait of Hormuz and damage to refineries in Russia. To mitigate sharp price hikes, Smotrich had previously issued orders reducing excise taxes, first by 0.50 shekels and then by a full shekel per liter (including VAT).
The tax reductions have resulted in an estimated monthly revenue loss of approximately 360 million shekels for the state treasury. Beyond the financial impact on the government, the excise tax reduction may distort the market, as the subsidized price does not fully reflect the current global fuel shortage. The International Energy Agency (IEA) anticipates that the supply of oil and refined products will continue to exert upward pressure on prices in the coming months.
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