Punished at the pump

By
January 29, 2011 23:23

Alleviating our frustration at the gas pump has become a cause célèbre that cuts across party lines.

3 minute read.



Worker filling a gasoline pump.

311_gasoline pumps. (photo credit:Associated Press)

It must mean a great deal when Knesset members echo and even amplify the outcry of regular folks. Thus when MKs last week urged Prime Minister Binyamin Netanyahu to personally intervene and reconsider recent excise tax hikes on gasoline, they must be perceived as responding to an irresistible groundswell of discontent.

This impression is further reinforced by the fact that the Knesset Economics Committee has called for a parliamentary commission of inquiry to probe the entire issue of fuel prices here.

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The fact that we pay more for filling up the tank than most anywhere in the Western world is obvious to ordinary Israelis. The price of gasoline in Israel, if calculated in American terms, is one of the highest in the world – about $8 per gallon.

But it’s bad also by European standards. Indeed, our intuitions have of late received empirical backing from the Knesset Research Center, which was commissioned by the Economics Committee to collect and process comparative-price data. The bottom line was that last December we shelled out 25 percent more per liter of gasoline than was the average in 15 Western European countries. The gap has widened since, reaching about 30% this month due to the recent excise increases. And gasoline prices are slated for another increase in February.

In all, even before excises were raised, Israelis were taxed 18% more per liter than their European counterparts. If we look further back, the picture gets bleaker. Gasoline prices are 53% more expensive here today than they were in 2005 (versus a 38% increase in EU states) and diesel fuel is up by 97% for that same time-frame. At this point it’s instructive to recall that crude oil prices climbed by less than 20% in the past year and remain only half of what they were a couple of years back.

Also contributing to the outrage is the fact that marketing profit margins here are nearly double what gas companies charge in Europe. This, coupled with excessive taxation, keeps our fuel prices disproportionately high. It serves everyone but the consumer. Profits enrich corporations while fuel excises play a cardinal role in the government’s deficit-reduction efforts.

The Treasury’s additional justification for higher gasoline prices, as contributing to environmental protection by forcing the citizenry to resort to public transport, rings particularly hollow. For one thing, bus and cab fares have soared concomitantly with the excise hikes. Recent demonstrations, especially in Tel Aviv, served to show quite unambiguously that the public isn’t falling for lame excuses.

THIS HAS helped the message get through to the very MKs who ratified the 2011-12 state budget (and with it the excise hikes) last month. The Knesset Finance Committee specifically approved the higher gasoline taxes two weeks ago. Now however, parliamentary sentiment seems shifting, and that in itself is a good thing, much as we may scoff, understandably, at the populist vicissitudes of our politicians.

Even if their motivations are less than entirely righteous and sincere, it is encouraging to realize that they are listening to the vox populi. Alleviating our frustration at the gas pump has become a cause célèbre that cuts across party lines.

The upshot is that our lawmakers have pledged to somehow rectify the situation and bring prices down. We have no way of predicting whether they’ll succeed. Odds are that they won’t be able to turn the hands of the clock back and return us to some phase of the status quo ante. But they are more likely, at least, to impact future governmental alacrity to raise fuel prices as a means to balancing the state budget. That facile solution may become a little less expedient a measure.

Perhaps the most hopeful sign of all, though, is that the Treasury even bothered to reply to the gasoline price squawk. It is not often that the Finance Ministry reacts to anti-tax protests.

Its environmental and fiscal pretexts may be preposterous and unacceptable, but they at least prove that the men from the ministry are feeling the pressure – which in itself is a modicum of success that warrants mild optimism.

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