MKs vow to fight rising fuel prices

By RON FRIEDMAN
January 27, 2011 06:30

Shama-Hacohen: ‘Citizens experience frequent price hikes that go beyond the increases demanded by the price of oil.’

3 minute read.



Worker filling a gasoline pump.

311_gasoline pumps. (photo credit: Associated Press)

MK Carmel Shama-Hacohen (Likud), chairman of the Knesset Economic Affairs Committee, on Wednesday accused the fuel companies and the Finance Ministry of excessive prices and excessive taxation, respectively.

Lawmakers pledged to do everything in their power to reduce fuel prices.

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The debate was sparked after gas prices increased in December and January, creating a public outcry. They will go up again on February 1.

According to a Knesset Research Center report, prepared for the debate, Israelis pay nearly 25 percent more for fuel than the average in 15 Western European countries. The average price of gasoline in Europe in December, was 1.15 euros per liter, compared to 1.41 euros per liter in Israel. Today the price of fuel in Israel stands at 1.52 euros per liter.

“Today’s discussion is the start of a campaign to lower gas prices, so that the party at the consumer’s expense will come to an end,” Shama-Hacohen said at the start of the meeting.

According to the study, he said, the marketing profit margin, which is one of three elements that make up the price of fuel, is nearly double that charged by the gas companies in Europe. The other two components are the Bazan rate, which determines refining prices and reflects global oil prices, and government taxation.

“Fuel is a basic product,” Shama- Hacohen said. “We consume it like we do any other commodity. Israelis leave gas stations frustrated. They pay fuel bills that are disproportionate to those found in surrounding countries.”

Ami Tzadik, of the Knesset Research Renter, said the price of fuel, in terms of local purchasing power, is 23% higher in Israel than the average price of fuel in Western European countries.

The marketing portion of the Israeli price is 80% higher than its parallel in Europe, he said.

Between January 2005 and January 2011, the price of fuel in Israel increased 53%, compared to an increase of 38.5% in the European Union, the report said.

In Israel, 13% of the price of fuel goes to the gas companies, while in Europe the companies receive 8.5%. In Israel, 55% of the price of fuel goes to taxes, compared to 58.5% in Europe.

“Citizens experience frequent price hikes that go beyond the increases demanded by the price of oil,” Shama- Hacohen said. “The excessive increases are the responsibility of the Finance and National Infrastructures ministries, which approve the prices.”

Likud MK Ophir Akunis, a former Economic Affairs Committee chairman, said the panel has been waiting for more than a year to hear from the Fuel Administration, part of the National Infrastructures Ministry, about the marketing and distribution component, and it demanded answers.

“Lowering fuel prices is in our hands,” he said. “Our job as publicly elected officials is to battle for the public.

We will act to reduce fuel prices.”

Kadima MK Yoel Hasson said the battle for lowering gas prices was not a political one and crossed party lines.

He said he would raise the subject in the Knesset State Control Committee, which he chairs, and where he said the ministers in charge would be forced to attend discussions.

“I propose that the committee make a clear decision that fuel taxation should not be used to fill in budgetary gaps,” he said. “The tax increases for 2011 and the one planned for 2012 should both be canceled.”

The Finance Ministry’s representative to the committee, Udi Adiri, said the increases totaled NIS 2.5 billion over the next two years.

Labor MK Amir Peretz said the blame should be assigned to the ministers in charge.

Yossi Aryeh, secretary-general of the Israel Oil Companies Association, which represents the four largest fuel providers, said the report’s findings were inaccurate and misleading. The profit margins had actually dropped 10% over the last two years, he said.

In a statement presented to the committee, Aryeh wrote that the rise in fuel prices was due to the rise in the price of crude oil and not the marketing margins that go to the companies. The report had not taken into account the fuel companies’ rising overhead expenses, he wrote.

The committee unanimously calling upon Prime Minister Binyamin Netanyahu to “intervene in the fuel price crisis and reexamine the government’s decision on the matter.”

It also called for the formation of a parliamentary commission of inquiry to investigate the energy-product market, specifically looking into competition, profit margins and licensing of gas stations.


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