Fuel Prices in Israel: Why the Pump Costs So Much
Israel ranks among the most expensive countries on Earth for refuelling. At roughly $2.687 per litre of gasoline (about ₪8.06 in local currency, or around $10.17 per US gallon), Israeli drivers pay nearly double the global average pump price of $1.484 per litre. Out of 170 countries tracked, Israel sits at rank 168 — meaning only two places are pricier. Diesel is slightly cheaper at about $2.553 per litre, but it offers little relief to households running petrol cars.
What Actually Drives Israeli Pump Prices
The single biggest factor is taxation. Israel imposes a heavy excise duty (the "blo" levy) on gasoline, layered on top of 17–18% VAT. In practice, taxes make up well over half of the retail price at the pump. The Israeli government also operates a regulated maximum price for 95-octane gasoline at full-service stations, recalculated monthly against international product prices (typically the Mediterranean benchmark) and the shekel–dollar exchange rate. So when global crude or refined-product prices rise, or when the shekel weakens against the US dollar, the regulated ceiling climbs automatically the following month.
Crucially, Israel is a fuel importer, not a meaningful crude exporter. Although offshore gas fields like Leviathan and Tamar have transformed the country's electricity and natural-gas picture, that gas does not lower the price of liquid transport fuels. Crude and refined products are still bought on world markets and refined domestically at Haifa and Ashdod, so motorists feel every swing in international prices and currency.
Currency, Subsidies, and the Trend
Because the regulated price is pegged to a dollar-denominated benchmark, the strength of the shekel matters enormously. A weaker shekel makes imported fuel more expensive in local terms even when the dollar barrel price is flat. Unlike oil-rich states that subsidise consumption to keep prices artificially low, Israel does the opposite: it taxes fuel aggressively, partly for revenue and partly as a deliberate policy to discourage driving and fund roads and transit.
The historical record makes the upward trend clear. Over the decade from July 2016 to June 2026, Israel's gasoline price averaged about $2.248 per litre. The low point of $1.668 came on 4 May 2020, during the COVID-era collapse in global oil demand. The all-time high of $2.775 was recorded on 4 May 2026 — just weeks before the current reading. Today's $2.687 sits near that peak and well above the ten-year average, signalling that prices have trended firmly higher, pushed by post-pandemic demand recovery, currency pressure, and tax policy.
How Israel Compares Globally
Israel's price level puts it in the same elite-cost bracket as Europe's most expensive markets. It runs close to high-tax economies like the Netherlands and Denmark, and the dynamics resemble the import-and-tax model seen in Hong Kong. The contrast with low-income importers such as Malawi is stark — though in both cases drivers ultimately pay for fuel they cannot produce themselves. To see where any country stands, browse the full table of world fuel prices.
FAQ
Why is gas so expensive in Israel?
The main reason is taxation. Israel layers a high excise duty plus roughly 17–18% VAT onto imported, dollar-priced fuel, and the government sets a regulated maximum price updated monthly. Taxes alone account for more than half of the $2.687-per-litre pump price.
How much does a gallon of gas cost in Israel?
About $10.17 per US gallon at current rates, equivalent to roughly $2.687 per litre, or ₪8.06 per litre in local currency — nearly double the world average.
Does Israel produce its own oil?
No. Israel has large offshore natural-gas reserves used for electricity, but it is a net importer of crude oil and refined fuels. That is why pump prices track international product prices and the shekel-to-dollar exchange rate so closely.