Israel Fuel Prices May Cross NIS 9 Mark After Election Vote

Finance Minister Bezalel Smotrich faces a decision that will directly impact household budgets in Israel following the upcoming elections. A temporary reduction in the excise tax on gasoline is scheduled to expire on November 3. If the cut lapses, the cost of 95-octane gasoline could exceed NIS 9 per liter, a sharp increase from the current price of NIS 7.77.

The tax relief was introduced in two stages over the past two months. An initial order signed in August reduced the tax by 0.5 NIS per liter. Smotrich later doubled this reduction to 1 NIS per liter as global oil prices climbed. The measures were designed to prevent fuel costs from spiking before the vote. Under standard conditions, taxes account for more than 60% of the retail price of gasoline in Israel. The Finance Ministry estimates that these recent reductions will cost the state approximately NIS 467 million in lost revenue.

This financial outlay occurs while the state manages record defense spending linked to the ongoing war. The Budget Department within the Finance Ministry provided the cost estimate for the tax cuts. Smotrich must now determine whether to extend the relief after the electoral results are known. If the current government fails to maintain a majority, he may allow the tax to revert to standard rates, transferring the economic burden to the incoming administration.

Drivers may see the first price adjustment as early as Saturday night. Global oil prices have risen by approximately 10% compared to late September. This increase was triggered by expectations of a third round of conflict involving Israel, Iran, and the United States. The Energy Ministry's Fuel Administration set the current October price based on earlier market conditions. The new price will be calculated based on Mediterranean basin oil prices at the end of this week.

Even if Smotrich chooses to maintain the 1 NIS tax cut, gasoline prices are projected to rise. Analysts expect an increase of around 30 agorot per liter, which would place the price just above NIS 8. However, if the tax cut expires, the cumulative effect of higher oil costs and restored taxes could push the price beyond the NIS 9 threshold. The new rate may remain in effect for only a few days before the next adjustment.