Smotrich Tax Expiration May Push Israeli Gasoline Past Nine Shekels

Israeli drivers may see the price of 95-octane gasoline exceed nine shekels per liter in the coming days. This potential jump follows the scheduled expiration of a temporary fuel tax reduction on November 3. The current price stands at NIS 7.77, but rising global oil costs threaten to push it higher immediately after the election.

Finance Minister Bezalel Smotrich implemented the tax cut last month to shield consumers from price spikes ahead of the vote. The measure doubles a previous reduction, lowering the state excise tax by one shekel per liter. Under standard conditions, taxes account for more than 60% of the final pump price in Israel. The Finance Ministry estimates that the reductions over the past two months will cost the state approximately NIS 467 million in lost revenue.

Global oil prices have climbed by about 10% since late September. This increase stems from expectations of a third round of conflict involving Israel, Iran, and the United States. The Energy Ministry’s Fuel Administration set the October price based on lower oil costs from that earlier period. Consequently, the current price point no longer reflects the current market reality.

If the tax cut remains in effect, the gasoline price is expected to rise by roughly 30 agorot per liter. This would place the cost just above eight shekels. However, if the reduction lapses on November 3, the price could climb above the nine-shekel threshold. Smotrich must decide whether to extend the relief after the elections. If the current government is not re-elected, he may allow prices to surge, leaving the economic impact to the next administration.

The final price update is scheduled for the end of the week. The Fuel Administration will determine the new rate based on oil prices in the Mediterranean basin at that specific time. The new price may remain in effect for only a few days before the next adjustment. The first price increase is anticipated as early as Saturday night, forcing drivers to pay more before the official tax deadline arrives.