Knesset committee demands fuel controls

Gasoline prices for rose to a record of over NIS 7 per liter as a result of soaring oil prices coupled with the shekel's depreciation against the dollar.

gas good 88 224 (photo credit: Ariel Jerozolimski)
gas good 88 224
(photo credit: Ariel Jerozolimski)
The Knesset Finance Committee urged the Finance Ministry on Tuesday to reinstate diesel fuel controls in response to skyrocketing oil prices. "We call upon the Finance Ministry to bring diesel fuel prices back into the supervision of the government to recuperate the damage caused by rising fuel prices," said MK Stas Meseznikov, chairman of the Knesset Finance Committee on Tuesday. Gasoline prices for July rose by an average of 4 percent at midnight on Monday to a record of over NIS 7 per liter as a result of soaring global oil prices coupled with the shekel's depreciation against the dollar in June. Since the beginning of the year, diesel fuel prices have surged by over 40%. As part of the privatization process and the selling of the government-owned Bazan Oil Refineries in January 2007, it was decided to lift wholesale gasoline price controls, to create a free market and encourage competition. At the time, fuel companies complained that their profit margins would be eroded. However, the recent steep rise in diesel fuel prices has raised a public storm, with consumers, taxi drivers and moving companies contending that prices have risen completely out of proportion to the rise in world oil prices. "The reform in the prices of the fuel industry promised to create a competitive market," said MK Israel Hason of Israel Beitenu. "However, what has been created is a cartel - not a free market, and at the end of the consumer suffers. It is time to correct the mistakes incurred by the privatization." Gabi Ben Haroush, chairman of the Haulers Council, went further, saying that the situation was encouraging the development of a criminal industry where you can find gas at prices of NIS 3 to NIS 4. The protest against record fuel prices came to a head last month as hundreds of truck drivers, taxi drivers and bus drivers gathered to demonstrate their dissatisfaction of the government's apparent indifference to the problem. Meanwhile transporters and haulers launched a campaign to abolish the excise (tax on diesel) and resume government supervision of diesel prices in gas stations, saying that the transportation business is about to collapse due to the huge expenses caused by fuel price hikes. Also speaking at the Knesset Finance Committee was Boaz Sofer, senior deputy director at the Israel Tax Authority, who refused the request by the haulers and taxi drivers to cancel the tax on diesel. "The transportation sector is faced with problems but the excise is the least of their problems," said Sofer.