The maximum price of government price controlled 95 octane gasoline at self-service pumps in Israel in January will rise by NIS 0.09 per liter on Saturday at midnight, to NIS 6.94 per liter, the Ministry of National Infrastructures, Energy and Water Resources has announced. The charge for receiving full-service at pumps from gas station attendants will remain NIS 0.21.
This will be the third consecutive month that gasoline prices has risen and January's price will be the highest since July 2022, when the price of 95 octane gasoline reached NIS 8.08 per liter.
The latest price hike comes despite the ongoing stability in oil prices on world markets and the price of a barrel of oil has even decreased slightly over the past month. But in Israel, the increase in price reflects the expiration of the excise tax reduction on fuel as well as the strengthening of the dollar against the shekel. The cancellation of the tax cut is responsible for an increase of about NIS 0.33 per liter of gasoline.
The reduction in the excise tax on fuel, which peaked at NIS 1 per liter in the summer, was supposed to have ended many months ago, but was extended time and again, although the cut was reduced, by outgoing finance minister Avigdor Liberman. When Liberman was asked this week if he would extend the cut one more time, he replied that the price hike would occur after he is no longer Minister and Finance, and that there was no budgetary source for the continuation of the reduction anyway. So far, the reduction has cost the Ministry of Finance NIS 2.3 billion in lost tax revenues.
Incoming Prime Minister Benjamin Netanyahu said in his election campaign that he would work to cancel the fuel price increases. However, it will be more difficult for the next government to extend the reduction in excise duty on fuel. If the government wants to renew the excise tax reduction into 2023, then it will have to do so under the limitations of the ongoing budget and cut back elsewhere to finance the loss of tax revenues.
The reduction in excise duty on fuel was originally introduced following Russia's invasion of Ukraine, which led to a spike in energy prices and oil in particular. The move was intended to keep prices down as long as they were soaring on the international market. Today, the cost of a barrel of oil has returned to its pre-war level. Since reaching a peak of about $120 per barrel of Brent crude last June, the cost has gradually fallen back to around $80 per barrel.
Published by Globes, Israel business news - en.globes.co.il - on December 29, 2022.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.