Israel Faces Fuel Price Hike Post-Election as Minister Seeks to Mitigate Rise

Israel's Finance Minister Bezalel Smotrich is exploring options to extend fuel tax reductions beyond the upcoming elections to prevent a significant price increase, potentially reaching nine shekels per liter. On Wednesday, October 28, Smotrich discussed extending the reduced tariffs into November with senior ministry officials. However, due to the measure's high cost, the excise tax might only be reduced by half a shekel instead of a full shekel.

The current decree, signed by Smotrich, is valid until November 4, maintaining subsidized prices until that date. Following its expiration on November 5, gasoline prices are expected to rise to at least 8.77 shekels per liter. Global oil prices are increasing, and the dollar has strengthened against the Israeli shekel to approximately 3.10 shekels as of October 28, potentially pushing the price up to 8.90 shekels per liter.

Minister Smotrich has tasked ministry specialists with analyzing expected tariff changes, the global fuel market situation, and budget sources for a full or partial extension of the decree. The current fuel tax reduction has already cost the budget nearly 500 million shekels. A full shekel reduction would cost an additional 300 million shekels, while a half-shekel reduction would cost 150 million shekels.

Previously, on October 5, the price of 95-octane gasoline at self-service stations dropped to 7.77 shekels per liter due to a half-shekel excise tax reduction, following a similar cut in September. Without these reductions, the price would have been 8.77 shekels per liter.