Japan's ministry of economy, trade and industry (Meti) will end the additional gasoline subsidy to cap the retail price at ¥175/litre ($1.18/l) on 3 September, a Meti official told Argus today.
Meti is currently providing a fixed price subsidy of ¥10/l, as well as an additional subsidy to cap the retail gasoline price at ¥175/l when the price is expected to exceed the ¥175/l threshold even inclusive of the ¥10/l subsidy. The additional subsidy was set only for July and August.
The ministry started shifting to the fixed ¥10/l subsidy scheme in late May, from the previous scheme that was designed to reflect market fluctuations. This shift aimed to expand the subsidisation and ease consumers' burdens caused by inflation.
But oil prices soared after shifting to the scheme because of the Israel-Iran conflict that broke out in June. Meti temporarily provided the extra subsidies for July and August in response.
The ministry will end the additional subsidy on 3 September but will maintain the fixed ¥10/l subsidy past that date. It will also end additional subsidies for diesel, kerosine, fuel oil and jet fuel by 3 September but will continue subsidising the existing fixed price subsidies of ¥10/l for diesel, ¥5/l for kerosine and fuel oil and ¥4/l for jet fuel.
The end date for these fixed price subsidies has not been decided. This scheme may continue until the government completes the revision on the country's gasoline tax, which is currently being discussed between the country's ruling and opposition parties.
Meti has been setting the subsidy price on a weekly basis. It has set the gasoline subsidy for 28 August-3 September at ¥10.50/l. This price comprises the fixed ¥10/l and an additional subsidy of ¥0.50/l. Japan's subsidised retail gasoline prices averaged ¥174.20/l as of 25 August, according to Meti.
