After a week of rumors, officials confirmed Thursday that Israelis were in for a big discount on gas next month. Beginning Motzoei Shabbos, Sept. 1, the price of 95 octane gas will fall by 19 agurot, to a price of NIS 6.07/liter ($6.51/gallon). The drop in price is attributed to a fall in the cost of crude oil, and an appreciation of the shekel. The dollar/shekel exchange rate is currently $1/NIS 3.52.
Gas prices in Israel are government-controlled, in that a maximum price is set (although many gas stations discount gas for members of their customer club, etc.). The prices are set at the end of the calendar month, and are based on deliberations made by a committee made of representatives of the Economy and Infrastructure Ministries. The price is usually tied to the international price of crude oil.
While the price per liter of gas is high, it should be noted that the actual refined gasoline in a liter of Israeli gas accounts for only 35% of the pump price – with taxes accounting for the other 65%. The tax burden has fallen recently after the expiration of a gas excise tax.