Gas Prices to Drop 5%, Starting Tuesday

The decline of gas prices in Europe and a weakened dollar contributed to the decrease at the pump.

Gasoline prices will drop 5% at midnight on Monday. The Energy and Water Ministry, which regulates the maximum retail price of gasand adjusts it at the beginning of each month, announced that the topprice of self-serve regular will be NIS 7.57 perliter, effective April 2.

This represents a drop of 38 agorot from the current price. The maximum permittedsupplement for full-service gas, which is linked to the wage index, will also godown by one agora per liter to 17 agorot.

The global price of gasoline shot up earlier this year due to anincrease in oil prices and the widening markup that refineries have beencharging. In the United States, for example, the U.S. Energy Department hasattributed about two-thirds of the increase in the price of gas to refineries.

In Israel, the maximum gas price is based on fuel prices in Europe,although it is also affected by the strength of the shekel.

From Januarythrough March, gasoline prices here increased by 5.7% to NIS 7.95 per liter forself-serve, a level only exceeded last September when prices hit NIS 8.25 per liter. But over the past month, gasoline prices in Europe have declined by 7.8%and the dollar has weakened against the shekel by 2.4%. The combined effect led to the April price drop.

Othercomponents of the gasoline price in Israel – the retailer's markup and excise andvalue added taxes – will not go down, so the overall price difference at the pump willbe less dramatic than the reduction of the oil price indicates.

The new price will take effect on April 2 rather than on the first of the month, as is usually the case, because of the Passover holiday.

Tomer Appelbaum