A painful blow to drivers: fuel prices in Israel are surging starting August 1st
The month of July brought good news with a drop in fuel prices, but the upcoming update is expected to cancel it out almost completely. Drivers in Israel will feel the blow to their pockets as early as the beginning of next month, despite the tax safety net.
Drivers in Israel are going to pay more at the gas station at the beginning of August. This increase will wipe out almost all of the price reduction report we received in July (when fuel dropped by 32 agorot). While it was initially estimated that the price would rise to around 7.75 shekels per liter of 95-octane gasoline at self-service, the updated check shows exactly why the price is jumping by 25 to 30 agorot, bringing the price for full service very close to the 8 shekel per liter threshold.
The main reason for the change is the chaos in the global energy market. The first report was based on an oil price of about 96 dollars per barrel due to tensions with Iran. However, in the updated report, the price of oil has already jumped above the 100 dollars per barrel threshold following Houthi attacks on tankers in the Red Sea. Only a temporary pause in attacks by the USA prevented the price from jumping even higher.
Beyond the price of oil abroad, the dollar has also strengthened, hurting our pockets. The dollar rose from 3.001 shekels in the previous update to 3.062 shekels today. The currency appreciation alone adds about 5 agorot to every liter. Bottom line, the combination of the rise in the dollar and the rise in global fuel prices will add approximately 13.5 shekels to every full tank refill (50 liters).
So why does a jump of over 20% in the global price of oil not double the price at the station? The answer is taxes. About 63% of the amount we pay at the station goes directly to the state (excise tax and VAT), and only about 28% of the price is influenced by the price of the oil itself. While these fixed taxes prevent the price from jumping even more extremely when there is a storm in the world, they still leave Israeli drivers with a painful blow to their pockets heading into August.
