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.
90% of Israel’s oil imports come from former Soviet Union countries, through the Caspian Sea. Israel has the third highest gas prices in the world, Britain the highest.There are two main reasons for taxing gas so heavily, firstly it reduces consumption through economic means and secondly it stabilizes prices. I wrote a series of four articles on Israel’s oil imports and its ‘greenification’.
See below,
Energy cooperation a key part of Olmert’s visit to Moscow
With 90% of Israel’s oil coming from Russia, pipeline plan through Turkey would increase access.
Click here to view the entire article:
http://www.jpost.com/servlet/Satellite?pagename=JPost%2FJPArticle%2FShowFull&cid=1159193473859
Israel pushes to reduce oil dependency
The National Infrastructures Ministry plans to present a strategy on November 20.
Click here to view the entire article:
http://www.jpost.com/servlet/Satellite?pagename=JPost%2FJPArticle%2FShowFull&cid=1162378316813
Comment by Ryan Nadel — February 8, 2007 @ 12:51 pm
Thanks, Ryan. I was trying to do some more detailed research on the issue, but searching for “Israel” and “oil” produced thousands of hits from anti-Semitic websites.
While the government may claim that gas prices are raised artificially in order to promote environmental interests and reduce consumption, neither has occurred. Instead consumption remains constant, with citizens adapting their meager incomes to the high gas (and car) prices. I’ll need a source for this, but Israel has an obscene ratio of automobiles per-capita, despite the 100% purchase tax which some gov’t officials may apologetically rationalize as incentive to not drive, protect the environment, and encourage public transportation.
The one step in the right direction is the reduction of the purchase tax on the Prius to 40%, and the lower excise tax on diesel.
Comment by lonelymanofcake — February 8, 2007 @ 1:21 pm
[...] under: Conservation, Israel, Transportation, Automotive — lonelymanofcake @ 4:49 pm The new Israeli gas prices, which are calculated in the final days of a given month and updated on the 1st of the month, as [...]
Pingback by Israeli Gas Prices, April 2007 « Lonely Man of Cake — March 29, 2007 @ 4:49 pm
[...] Filed under: Israel, Transportation, Automotive — lonelymanofcake @ 7:12 pm The new Israeli gas prices, which are calculated in the final days of a given month and updated on the 1st of the month, as [...]
Pingback by Israeli Gas Prices, May 2007 « Lonely Man of Cake — April 30, 2007 @ 7:12 pm
[...] Filed under: Israel, Transportation, Automotive — lonelymanofcake @ 11:33 am The new Israeli gas prices, which are calculated in the final days of a given month and updated on the 1st of the month, as [...]
Pingback by Israeli Gas Prices, June 2007 « Lonely Man of Cake — June 3, 2007 @ 11:34 am
As an american how is it we are the 3rd largest exporter of oil and on top of that we get most of “OUR” foreign oil from CANADA!!! You might say what kind of crude is it…??? Irelevant!!!
Comment by robin — April 17, 2008 @ 6:24 am