Israel Raises Gasoline Prices by 61 Agorot Amid Global Oil Surge and Currency Shift
Translated & summarized from Ynet by baba
Israel is raising gasoline prices by 61 agorot to 8.09 shekels per liter due to a global oil price surge and a stronger dollar. Taxes make up a large part of the cost, generating significant state revenue. The government cannot reduce fuel taxes during the election period, and the price hike is expected to impact inflation and monetary policy.
The story in 6 lines · by baba
- Gasoline price in Israel rises 61 agorot to 8.09 shekels per liter starting Saturday midnight.
- Price hike caused by 22% global gasoline price increase and 1.9% stronger US dollar.
- Excise tax and VAT form the largest part of the fuel price, with excise tax at 3.61 shekels per liter.
- State earned about 21.5 billion shekels from fuel excise tax in 2021, up from 13 billion previously.
- Government cannot cut fuel taxes now due to election restrictions, unlike past tax reductions in 2012 and 2022.
- Fuel price rise expected to increase inflation by 0.4% and reduce chances of Bank of Israel rate cuts soon.
Starting Saturday at midnight, the price of 95-octane gasoline in Israel will jump by 61 agorot to 8.09 shekels per liter. This sharp increase is driven primarily by a 22% rise in international gasoline prices due to higher global oil costs and concerns over supply stability. Additionally, a 1.9% strengthening of the US dollar against the shekel has further pushed prices upward.
The Israeli Energy Ministry determines fuel prices monthly based on a formula set in 2002, which factors in average Mediterranean market prices, marketing costs, excise tax, and VAT. Excise tax alone currently adds 3.61 shekels per liter, and with an 18% VAT, taxes constitute the largest portion of the pump price. The state earns substantial revenue from these taxes, with excise tax income on gasoline reaching approximately 21.5 billion shekels in 2021, compared to about 13 billion shekels in previous years.
Despite calls to reduce fuel taxes to ease the burden on consumers, the government cannot lower excise taxes during the current election period, explaining the absence of immediate relief measures. Historically, tax reductions occurred in 2012 under Prime Minister Benjamin Netanyahu and again in 2022 under Finance Minister Avigdor Lieberman when prices exceeded 8 shekels per liter. However, the subsidy was canceled in early 2024 by Finance Minister Bezalel Smotrich amid growing budget deficits linked to the war.
While the current price is not an all-time record, it is the highest since September 2012, surpassing the recent peak of 8.07 shekels in May. The fuel price hike is expected to raise the consumer price index by 0.4% in August, diminishing the likelihood of further interest rate cuts by the Bank of Israel. To mitigate costs, drivers are advised to adopt fuel-efficient driving modes, avoid aggressive acceleration and braking, and prioritize public transportation, though these measures only partially offset the increased monthly expenses for families.
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