Israel Gasoline Prices May Cross NIS 9 After Election

Drivers in Israel face a potential surge in fuel costs immediately following the upcoming elections. A temporary reduction in the gasoline excise tax, implemented by Finance Minister Bezalel Smotrich, is scheduled to end on November 3. If the cut expires while global oil prices remain elevated, the price of 95-octane gasoline could exceed nine shekels per liter, up from the current rate of seven shekels and seventy-seven agorot.

Smotrich introduced the initial tax relief last month to prevent fuel prices from spiking before the vote. A prior order had lowered the tax by half a shekel per liter. As crude oil prices climbed, the finance minister doubled that reduction to one shekel per liter. The Finance Ministry's Budget Department estimates that these reductions over the past two months will cost the state approximately 467 million shekels. This expenditure arrives as the ongoing war drives defense spending to record highs. Under standard conditions, taxes account for more than 60% of the retail price of gasoline and generate roughly 20 billion shekels in annual state revenue.

The timing of the decision creates uncertainty for consumers. Smotrich must decide whether to extend the relief after the elections. If it becomes apparent that the current government will not remain in office, he may allow prices to rise, leaving the next administration to manage the economic impact. The first price increase is expected as early as Saturday night. Rising expectations of a third round of fighting involving Israel, Iran, and the United States have lifted oil prices by about 10% compared to late September, when the Energy Ministry's Fuel Administration last set the gasoline price for October.

Analysts project two possible outcomes for the new price. If the tax cut remains in place, gasoline is expected to rise by around 30 agorot per liter, bringing the price to just over eight shekels. If the reduction lapses, the price could climb above the nine-shekel mark. The final price will be determined toward the end of the 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 the next adjustment.

The conflict between the temporary fiscal relief and rising commodity costs sets the stage for a volatile period at the pump. The decision rests with the Finance Ministry, which will balance the need for revenue against the political pressure of the election cycle. The outcome will directly affect household budgets across the country. The next few days will reveal whether the state maintains the subsidy or reverts to standard tax levels.