A Gas Monopoly Is a Threat to Israeli Democracy

Huge impact of natural gas on Israeli economy mustn't be treated lightly: A monopoly over newly discovered gas reserves will overpower Israel's economy.

Courtesy Albatross

The issue of the cost of living in Israel, the future of certain industries and even elements of the government’s ability to govern – the main socioeconomic issues on the public agenda – are all liable to be decided in the coming days in the office of the antitrust commissioner, Prof. David Gilo.

Gilo will decide whether all the natural gas reserves discovered off Israel’s coast will be deposited in the hands of a private monopoly, the Delek-Noble Energy group, or whether the state will embark on a legal battle to divvy up ownership of this strategic resource among competing suppliers.

To get an idea of the enormous importance of this issue, it’s necessary to know the facts: In the coming years, natural gas will account for 80 percent of Israel’s electricity production. It will have a greater impact on the price of water than any other input, will be used in 90 percent of industrial production and is even likely to fuel 40 percent of the vehicles on Israel’s roads. Therefore, a monopoly that controls these gas reserves will determine not only the price of electricity, water and gasoline, but also the unemployment rate and the very existence of an independent economy.

If it is allowed to exist, the gas monopoly will determine the price of Milky puddings in supermarkets and be a key variable in decisions like whether more factories in Arad shut down. Thanks to its enormous consumer power, it will easily be able to promote political decisions or thwart regulatory steps that would affect its business interests.

We received a hint of this thanks to a rare record of a meeting that took place in July between representatives of the Delek-Noble Energy group and senior officials of the Antitrust Authority. The minutes of this meeting, which were published this week (Avi Bar-Eli, TheMarker), describe how the monopoly’s attorneys apparently threatened antitrust officials that should they decide to expropriate the enormous Leviathan gas field from the group, this will delay gas supplies to the Israeli economy by a decade and result in Israel being sued in an international court.

And indeed, for fear that these threats will be realized, Gilo is leaning toward capitulating to the pressure from Delek-Noble, waiving its obligation to sell Leviathan to a rival company and thereby perpetuating the monopoly for decades to come.

Prime Minister Benjamin Netanyahu, Finance Minister Yair Lapid, Energy and Water Resources Minister Silvan Shalom and Economy Minister Naftali Bennett must stop hiding their heads in the sand and take immediate action to prevent a strategic mistake that could even reach the point of threatening Israel’s democracy.