Why is gas so expensive in Israel? For years, I assumed that the high prices were a function of Israel’s need to purchase oil from the surrounding, hostile Arab countries. Naturally, they would charge the Jews a higher price.
But I was wrong. As outlined in this article, Israel does not rely solely on Arab nations for its oil. Why, then, does regular unleaded gas cost the Israeli consumer the equivalent of $4.60 per-gallon (calculated at 5.20 NIS per-liter, 3.78 liters to the gallon @ 4.25 Shekels to the US Dollar)?
The answer: petrol, or gasoline, is a tremendous source of revenue to the Israeli government. Check out the below pie-chart.
The green section represents the actual gas price: 35.4% of the final price! That means before it hits the pump, gas is purchased for $1.62 per-gallon. 10.4% is tagged on for marketing, i.e., the profit-margin for the fuel companies. Then comes the fun part. There is a set excise tax, fixed by the government, of 2.20 NIS per-liter (=$1.95 per-gallon). This tax is referred to as Blo (בלו), a word first attested in Biblical Aramaic (see Ezra 4:13), when Persian government officials wrote to king Artaxerxes, fearing that the Jews would secede from the Persian commonwealth (and not pay their excise tax) with the completion of the walls of Jerusalem. Last but not least, the government takes 15.5% of the compounded price (i.e., including the excise tax and 10% profit margin) as VAT.
That is why it costs you $75 to fill up your compact car. So that the government can take $40. You should be paying only $35.
