Gas prices drop amid talk of cheaper cars

Self-service 95-octane to dip 31 agorot Tuesday night; government passes bill predicted to reduce price of vehicles by 20%

At the beginning of May, for the second consecutive month, the price of gasoline in Israel will drop significantly. As of Tuesday night at midnight, the cost of 95-octane self-service fuel will be NIS 7.26/per liter (approximately $2.00).

In Eilat, where VAT is not charged, the cost will be NIS 6.21 per liter (approximately $1.72).

A Ministry of Energy and Water Resources press release on Sunday attributed the 31-agorot (about 9 cents) reduction to the decline in the US dollar and lower worldwide fuel prices. In April, prices plummeted 38 agorot per liter.

Earlier on Sunday, the Cabinet approved the Transportation Ministry’s proposed vehicle registration bill, which opens the field to more competition for importers and is expected to lower the price of new cars in Israel by some 20 percent and the price of spare parts for vehicles by at least 30%. Additionally, the bill introduces conditions under which service garages may lose their licenses, and it will establish a website for comparing the price of parts among service garages.

While the bill is expected to drastically lower car prices in the long term, according to the Globes financial daily in the short term prices are likely to rise as a result of new green tax, higher VAT, and the luxury car tax planned by the Finance Ministry.

Gas prices fluctuated throughout 2012. Twice during the year, Prime Minister Benjamin Netanyahu intervened and lowered the fuel tax, reducing the sting of price hikes. In July, prices went as low as NIS 7.27 per liter before rising again in August and September.

In August 2012, Globes reported that gas prices in Israel are the third-highest in the world, behind only Norway and Turkey.

One month after that report, on September 1, gas prices in Israel hit an all-time high of NIS 8.25 per liter before dropping to NIS 7.96 at the beginning of October.