Israel Gas May Hit Nine Shekels

The price of 95-octane gasoline in Israel may exceed nine shekels per liter as early as next week. The jump follows the scheduled expiration of a temporary excise tax reduction on November 3.

Finance Minister Bezalel Smotrich implemented the tax cut last month to shield consumers from price spikes before the election. He previously signed an order lowering the tax by 0.50 shekels per liter. As global oil prices increased, he doubled that reduction to 1.00 shekel.

Current pump prices stand at 7.77 shekels per liter. The Energy Ministry’s Fuel Administration set the October price based on market conditions in late September. Since then, oil prices have risen by approximately 10% due to expectations of a third round of conflict involving Israel, Iran, and the United States.

The Finance Ministry’s Budget Department estimates the two-month tax relief will cost the state 467 million shekels. This expenditure occurs while war spending has driven defense budgets to record highs. Under standard conditions, taxes account for more than 60% of the retail gasoline price and generate roughly 20 billion shekels in annual state revenue.

If Smotrich allows the tax cut to lapse, analysts predict the price could surpass the nine-shekel threshold. Even if the relief remains in place, the price is expected to rise by about 30 agorot per liter. That scenario would push the cost to just over eight shekels.

The final price will be determined later this week based on Mediterranean basin oil prices. The new rate may apply for only a few days. Smotrich faces the decision of whether to extend the relief after the vote. If his government falls, he may let prices surge to shift the economic burden to his successors.