Israeli gasoline prices may exceed nine shekels after election vote

Israeli drivers are set to see a sharp increase in fuel costs immediately following the upcoming elections. The temporary reduction in the excise tax on gasoline, implemented by Finance Minister Bezalel Smotrich, is scheduled to expire on November 3. This expiration may cause the price of 95-octane gasoline to surpass nine new Israeli shekels per liter. The current retail price stands at 7.77 shekels.

Smotrich introduced the tax cut last month to prevent fuel prices from spiking before the vote. A previous order signed a month prior had reduced the tax by half a shekel per liter. As global oil prices rose, the finance minister doubled that reduction to one shekel per liter. Under standard conditions, taxes account for more than 60% of the gasoline price in Israel and generate approximately 20 billion shekels in annual state revenue.

The Finance Ministry’s Budget Department estimates that the tax reductions over the past two months will cost the state roughly 467 million shekels. This expenditure occurs while the ongoing war has driven defense spending to record highs. Once the elections are concluded, Smotrich must determine whether to extend the relief. If the current government is set to leave office, he may allow prices to surge, shifting the economic burden to the incoming administration.

The first price hike is expected as early as Saturday night. Expectations of a third round of conflict involving Israel, Iran, and the United States have lifted oil prices by about 10% compared to late September. The Energy Ministry’s Fuel Administration set the October gasoline price during that earlier period. Even if the tax cut remains in effect, gasoline is projected to rise by around 30 agorot per liter, pushing the price just over eight shekels. If the reduction lapses, the cost could climb above nine shekels.

The final price will be determined toward the end of this week based on oil prices in the Mediterranean basin at that time. The new rate may remain in effect for only a few days before another adjustment.