Tokyo, 26 February, /AJMEDIA/
The Japanese government is considering raising its subsidy for oil wholesalers to a maximum of 25 yen per liter from the current upper limit of 5 yen in an attempt to deal with soaring crude oil prices triggered by Russia’s invasion of Ukraine, an official with knowledge of the matter said Friday.
The plan is aimed at easing the impact of rising prices on households and businesses, with the government expected to announce the specifics next week.
“For the time being, we will suppress surging retail prices by greatly expanding and strengthening the mitigation program,” Prime Minister Fumio Kishida said at a press conference on Friday.
The government is also deliberating a plan to change the upper limit in stages in tandem with price rises, according to the official who spoke on condition of anonymity.
The industry ministry launched the program late last month to prevent oil distributors and importers from passing on higher wholesale prices to consumers, as concerns over tighter supplies were growing globally even before Russia’s invasion of Ukraine on Thursday.
The ministry initially set the subsidy at 3.4 yen. It was later revised to 3.7 yen, and again to 5 yen to reflect rises in gasoline prices, which are now above 180 yen ($1.55) per liter — their highest level in more than 13 years — in some areas in Japan.
The average price has been rising for seven consecutive weeks and was 172.00 yen per liter as of Monday. The ruling Liberal Democratic Party, headed by Kishida, has said the limit should be 25 yen per liter, which would be on par with invoking a 2010 trigger clause designed to cut gasoline taxes.
The government’s deliberations come as the April delivery contract for the benchmark West Texas Intermediate crude briefly hit $100.54 per barrel in New York on Thursday, its highest level since July 2014.