Gas prices to drop significantly at midnight due to tax breaks, lower price of oil
As of Monday, Israelis will pay an estimated NIS 6.54 per liter of gasoline, down from NIS 8.08; newest tax discount limited to month of August
Tobias (Toby) Siegal is a breaking news editor and contributor to The Times of Israel.
Gas prices in Israel will drop by around NIS 1.50 ($0.44) per liter at midnight on Sunday, after steadily rising in recent months.
As of Monday, Israelis will pay an estimated NIS 6.54 (approximately $1.92) per liter of gasoline, instead of NIS 8.08 (approximately $2.37) as they did throughout the month of July — a record high not seen in Israel since 2012.
The price drop is the result of the government lowering the excise tax on gasoline, first announced by Finance Minister Avigdor Liberman in April, and the lower price of crude oil, which has been dropping globally since early June.
Oil prices spiked at $122.11 per barrel on June 8 — the highest price since March 8 — and have since dropped to approximately $98 as of Sunday.
This change is partly due to the concerns of a global recession, which in turn have predicted a lower demand for oil in the near future. Other reasons could be the release of United States oil reserves and a rise in oil production in countries including the US and Libya.
But even with lower oil prices, over half of the Israeli price for a liter of gasoline is the result of taxes.
Liberman reduced the tariff by half a shekel per liter in April and the latest cut is expected to be the same, meaning a total NIS 1 in tax relief per liter.
This latest tax discount, however, is set to last only a month and prices are expected to go up again by half a shekel per liter by the end of August. The initial half-shekel tax reduction that began in April is set to expire at the end of January 2023.
The price drop will come as a relief to many Israelis struggling with the rising costs of living.
“There are those who visit gas stations a moment before elections accompanied by a film crew and suits, and there are those who came to work,” Liberman tweeted Thursday ahead of the planned tax relief, in an apparent reference to a video uploaded by opposition leader Benjamin Netanyahu earlier this month showing the veteran politician visiting a gas station and remarking on the high prices of gas. Elections are set for November 1.
While inflation in Israel has been more modest than in other countries in the developed world, it has seen steep jumps in the cost of living, from food to building materials. The country is also struggling to rein in rocketing real estate prices.
The cost of dairy products under government price controls increased by 4.9% two weeks ago, and the average for price-controlled eggs has recently increased by 6.5% for the first time since January 2019.
A planned increase in bread prices was eventually negotiated to be more modest with the price of a basic, uncut, dark loaf going up by 5%. Prices will rise by up to 30% by December, however.
The Israel Electric Corporation (IEC) said Wednesday it also agreed to a slightly more moderate price hike in August — 8.6% instead of 9.6% announced by the Electricity Authority earlier this month.