2024 gift - Fuel Prices Soar in Israel as Subsidy Expires: NIS 7.22 per Liter of Octane 95

In an abrupt change, the price of fuel in Israel skyrocketed overnight by 28 shekels per liter, reaching a staggering NIS 7.22 per liter for Octane 95. This surge comes after a decision made at noon in a Ministry of Finance meeting to not extend the discount on the current price, effectively ending a fuel subsidy through tax reduction that lasted for a year and a half.

Former Finance Minister Avigdor Lieberman had initially introduced the subsidy, which reached its peak at NIS per liter. However, the subsidy has now expired, leading to a considerable increase in fuel costs. The last discount on a liter of Octane 95 in self-service was 40 shekels, reducing the price to NIS 6.94. With the subsidy no longer in effect, the price has jumped to NIS 7.22 per liter.

The Fuel and Gas Administration at the Ministry of Energy issued a statement, noting the lack of updates from the Ministry of Finance regarding the excise order for January 2024. As a result, the current excise order stands, setting the fuel price for January at NIS 7.22 per liter, representing a 4% increase from the previous update. The price in Eilat will not exceed 6.17 shekels per liter, with the supplement for full service remaining unchanged at 19 shekels.

The fuel subsidy had already cost the state budget nearly NIS 3 billion, and the Ministry of Finance faced challenges in finding additional funding to sustain the tax reduction. A senior official at the Ministry of Finance emphasized that given the current deficit, exacerbated by the ongoing war, there is no longer room to subsidize fuel prices. Despite protests from the Budget Division, Tax Authority, and Chief Economist Division, the Prime Minister's Office and Finance Minister's Office insisted on maintaining the subsidy, expressing concerns that the increase in fuel prices could contribute to inflation in the economy.