Study: Israeli gas prices among highest in West
Price of gas in Jewish state is higher than in 18 of 22 developed countries, and reasons are primarily domestic, Taub Center finds
The research, which was conducted by the Taub Center for Social Policy Studies in Israel, found that only the United Kingdom, Greece and Portugal surpass the Jewish state in their prices of gas.
According to the study, while the shekel price of a barrel of oil today is the same as it was in July 2008, the price of a liter of gas on September 1 is expected to reach NIS 8.20 (roughly $2) – compared to NIS 7.00 ($1.75) in July 2008. This increase is largely credited to a tax hike of NIS 0.88 per liter of gas.
The research further shows that the tax on gas is substantially higher than all other price components – the price of crude oil, refining, shipping, marketing and profit margins – put together.
Astonishingly, the tax per liter of gas in Israel is higher than the price of an entire liter of gas in the United States, whose cost was ranked lowest among the 22 countries that were examined.
Furthermore, gas taxes in the Jewish state are higher than in 16 of 22 OECD countries, and consequentially, profit margins are higher than in 18 of these OECD countries.
"The findings validate the sentiment that many Israelis have: Gas prices in Israel are exceptionally high – both in comparison to the past and in comparison to other countries," said Professor Dan Ben-David, the executive director of the Taub Center and a Tel Aviv University economist who penned the study.
The study is to be featured in the forthcoming State of the Nation Report 2011-2012.
Rising oil prices not to blame
While a common misconception blames the rising costs of gas on the rising price of oil, the study shows that over the last four years, the price of oil has been in no way connected to the increased price of gas in Israel. In fact, the current dollar price of oil is 18% lower than it was in July 2008.
Ben-David blames the NIS 1.20-increase in the price of a liter of gas on domestic factors.
"While the dollar price of oil is lower today than it was in July 2008, the refining, transportation,
distribution and profit margins increased by NIS 0.34 per liter and the Israeli government increased taxes by NIS 0.88 on each liter of gasoline," he said.
According to study, total taxes per liter rose by 21% in real terms (i.e., after discounting for inflation) since January 1998 – with the excise tax rising by 12% in real terms and income from VAT rising by 56% in real terms.
Ben-David's research concludes that gas taxes in Israel are higher than those in roughly three-quarters of the 22 OECD countries included in the comparison.
When accounting for income differences among these countries, it turns out that the average OECD tax on gasoline was 35% below the Israeli tax, with 19 of the 22 countries exhibiting lower taxes relative to incomes than Israel.
