The government announced Friday that it will significantly expand a subsidy program to rein in gasoline and other fuel prices.
Given that crude oil prices remain high in the wake of Russia's invasion of Ukraine, the government will raise the current subsidy cap of 5 yen per liter to 25 yen in March. Details will be discussed at a meeting of relevant Cabinet ministers to be held shortly.
Aiming to keep the national average price of regular gasoline at around 170 yen per liter, the government has been providing subsidies to oil wholesalers since January.
Light oil, kerosene and heavy oil are also eligible for the subsidy program, in addition to gasoline. However, as crude oil prices have soared, the subsidies reached the upper limit of 5 yen per liter, limiting the effects of the subsidy program to rein in prices.
After raising the subsidy cap, the government will not change the target gas price of around 170 yen per liter.
Following Russia's invasion of Ukraine, international crude oil futures temporarily surpassed 100 dollars per barrel. Although the prices fell soon after that, crude oil prices remain at high levels.
By raising the upper limit of the subsidy, it is expected to be possible to keep the national average gasoline price at around 170 yen per liter if crude oil prices are around 100 dollars per barrel.
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