Israel Gasoline Price Set to Hit 9 Shekels as Tax Cut Expires

Finance Minister Bezalel Smotrich's temporary reduction in the excise tax on gasoline is scheduled to expire on November 3. This deadline aligns with a period of rising global oil prices, creating conditions where the cost of 95-octane gasoline in Israel could exceed nine shekels per liter. The current pump price stands at seven shekels and seventy-seven agorot.

Smotrich implemented the initial tax cut last month to prevent fuel costs from spiking before the national elections. A prior order had reduced the tax by half a shekel per liter. As oil markets fluctuated, the finance minister doubled that reduction to one shekel per liter to maintain price stability during the pre-vote period.

Taxes typically account for more than 60% of the total cost of gasoline in Israel. The Finance Ministry's Budget Department estimates that the reductions over the past two months will cost the state approximately 467 million shekels in lost revenue. This financial impact occurs while the government manages record-level defense spending related to the ongoing war.

Following the election results, Smotrich must determine whether to extend the tax relief. Analysts suggest that if the current government is unlikely to remain in power, the minister may allow prices to rise, shifting the economic burden to the incoming administration.

The first price adjustment is expected as early as Saturday night. Expectations of a third round of conflict involving Israel, Iran, and the United States have driven oil prices up by roughly 10% compared to late September. The Energy Ministry's Fuel Administration had set the October gasoline price during that earlier period.

Even if the tax cut remains in effect, gasoline prices are projected to increase by around 30 agorot per liter, pushing the total to just over eight shekels. If the reduction lapses entirely, the price is expected to climb above the nine-shekel threshold. The final rate will be determined toward the end of the week based on Mediterranean basin oil prices, and the new price may remain in effect for only a few days.