Government to review gasoline subsidies as costs mount

Prime Minister Sanae Takaichi has instructed industry minister Ryosei Akazawa to review government subsidies aimed at holding down the prices of gasoline and other fuel oil.

In talks with reporters at the prime minister’s office earlier on Friday, Takaichi noted that some in both the ruling and opposition blocs have urged the government to consider a phased review or an exit strategy for the subsidies due to concerns over the fiscal burden.

“We will consider the matter flexibly, including the amount of subsidies and an exit from the aid program,” she said.

Amid the Middle East turmoil, the government is providing subsidies to oil wholesalers to curb the average retail price of regular gasoline in the nation at about ¥170 per liter. It has considered raising the target price, among other steps, for a possible review of the subsidy program.

The balance of a fund for the subsidies stood at about ¥560 billion at the end of September. The financial resources are expected to run out in the near future due to soaring crude oil prices.

To continue the aid program, Takaichi also instructed her government staff to make efforts to secure a necessary amount of funds.

The government introduced gasoline subsidies in 2022 and terminated the aid at the end of last year. The program was reinstated in March this year as the Middle East situation remained tense, and a total of about ¥1.2 trillion in subsidies has been paid out since then.