Japan to review gasoline subsidies amid fiscal concerns

Japanese Prime Minister Sanae Takaichi has instructed the industry minister to review government subsidies designed to stabilize gasoline and fuel oil prices. The move comes as concerns grow regarding the fiscal burden of the program, with the subsidy fund standing at approximately 560 billion yen at the end of September. Due to rising crude oil prices, officials expect these financial resources to be depleted in the near future.

The government has been providing subsidies to oil wholesalers to maintain the average retail price of regular gasoline at around 170 yen per liter, a measure reinstated in March due to tensions in the Middle East. Proposals under consideration include a phased reduction or an exit strategy for the aid program. Some plans suggest reducing subsidies as early as December, which could result in monthly price increases of approximately 5 yen per liter.

While the subsidies aim to mitigate the impact of high prices on households and logistics, critics argue that maintaining low prices during supply constraints may weaken the incentive for energy conservation and exacerbate supply shortages. Takaichi has directed staff to seek necessary funds to ensure the continued stability of the program while evaluating its long-term viability.