Japan Resumes Gasoline Subsidies amid Middle East Tensions

Tokyo, March 19 (Jiji Press)–The Japanese government resumed subsidies for oil wholesalers on Thursday, aiming to lower retail gasoline prices to around 170 yen per liter amid escalating tensions in the Middle East. The subsidies were discontinued at the end of last year when the provisional gasoline tax surcharge was abolished. The resumption came after crude oil prices surged following Iran’s de facto closure of the Strait of Hormuz, a key oil shipping route, in response to U.S.-Israeli strikes on Iran. According to the industry ministry, the average retail price of regular gasoline in Japan climbed to a record high of 190.8 yen per liter as of Monday. The average price jumped 29 yen from a week earlier, equaling the record weekly increase. For the week from Thursday, the government will provide 30.20 yen per liter to oil wholesalers. Some gas stations in rural areas lowered prices on the day, while others left prices unchanged. The effects of the subsidies are expected to become more evident in a week or two. At a gas station in the central city of Nagano, the regular gasoline price was lowered from 194 yen to 174 yen on Thursday morning. The store manager said that the price cut was based on the expectation that the subsidies would lower procurement costs. Meanwhile, many gas stations in the northeastern city of Yamagata kept their prices unchanged. A ministry official said, “It seems difficult (for gas stations) to lower prices until they sell all inventories they bought at higher wholesale prices.” The government subsidies apply only to wholesalers’ shipments from Thursday onward. To alleviate public concerns about gasoline supplies, the government also decided to release oil reserves. END [Copyright The Jiji Press, Ltd.]