Gas Price Hikes Foreshadow Price Climbs in Entire Economy
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Gas Price Hikes Foreshadow Price Climbs in Entire Economy

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The price of gasoline soared by 40 percent last night. At the current exchange rate this means that a gallon of 94 octane gasoline now costs the Israeli motorist about $2.60.

Because of a slow-down strike by customs and tax officials, the Commerce Ministry was concerned today that at least some of the country’s 370 service stations have profiteered as a result of the price hike. Ordinarily when gas prices rise, customs and tax inspectors are dispatched immediately to check stocks in every station and impose a special levy to cover the price rise. This time, because of the go-slow, the inspection did not proceed as usual.

Economic circles said that the gas price rise would inevitably mean a rise in water and electric rates, although for the moment the government has not imposed these increases. Inevitably there will also be a ripple effect of price rises throughout the economy because fuel, whether for production of for transport, is a component in almost every commodity and service.

Energy Ministry sources said the first rise would be followed by a second wave of price hikes before the end of the year in order to keep abreast of world price rises and with the steady fall of the Pound which reached an all-time low of 1L 26-$1 this week.

The gasoline rise was one of two measures decided on at Tuesday night’s emergency Cabinet session. The other, a 60 percent rise in the cost of imported frozen meat, was implemented yesterday.


The political storm caused by that Cabinet session, during which the ministers failed to agree on a program for slashing government subsidies on basic foodstuffs, seemed to abate somewhat today. In part, observers felt, this abatement was due to Finance Minister Simcha Ehrlich’s television interview last night in which he hinted that Premier Menachem Begin had told him he himself would resign if Ehrlich stepped down as Finance Minister.

The Cabinet’s inaction Tuesday night, more over, seemed to receive more sympathetic treatment from many newspapers this morning than it did in political circles–including the coalition –yesterday. The Labor-affiliated daily Davar and the Mapam organ Al Hamishmar in effect backed the Cabinet’s 11th -hour change of heart over the Treasury’s proposal for a sweeping abolition of the subsidies.

But within the Liberal wing of Likud, the embarrassment and soul–searching is still intense and it is likely to come to a head at the party’s central committee meeting next week. Several Liberal MKs have been urging that the party’s four Cabinet ministers resign collectively in a protest against the government’s failure to adopt a tougher economic policy.

But voices also have been raised with in the Liberal Party to the effect that Ehrlich has become a liability and should therefore step down The Finance Minister himself has made it clear, privately and in his TV appearance, that he does not intend to resign alone.

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