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Wednesday, 9 February 2011

Gasoline Prices - Why prices are unlikely to fall soon - Wednesday 9th February 2011

After the news yesterday that the Government is working on solutions to reduce petrol prices in Israel, Globes has an interesting opinion piece saying that prices will not fall.

Globes explains that this is because the Government always planned to increase tax on gasoline so as to raise more funds in 2011 and 2012 to pay for the rising levels of public spending.  The approved budget for 2011-2012 estimated that the increased tax on petrol would raise a further 16.6 billion shekels in 2011 a rise from 2010 of 12.6% with a further 18.8 billion shekels in 2012 a further increase of 11.4%.

Despite the protests over the high price of petrol Globes predicts that the high price will not deter people from driving and so buying petrol as people will continue to need to travel just as much as before and do not feel that public transport provides a viable alternative.  Also many workers have their employers pay for their fuel costs and so do not feel the pain, while the increase has not yet been enough to scare of employers and persuade their staff to drive less.

The piece ends by predicting that as fuel becomes more expensive it will encourage the use of electric cars such as those produced by Better Place as they become a more viable alternative.

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