The ruling Liberal Democratic Party on Tuesday broadly approved a proposal to extend to year-end the gasoline subsidy program currently set to expire at the end of September.
The LDP also agreed in principle to further expand the program, which pays subsidies to oil wholesalers to curb retail fuel price increases.
The LDP will work out further details as it aims to lower the average retail price of regular gasoline, nearing the record high of ¥185.1 per liter, to below ¥180.
Since June, the government has gradually reduced the subsidy rate, which stands at 30%, to terminate the program at the end of September, saying that the crude oil market has regained calm.
Gasoline prices, however, have recently spiked again amid crude oil price increases and yen weakness against the U.S. dollar.
The average retail price of regular gasoline as of Aug. 21 climbed for the 14th consecutive week to ¥183.7, although the subsidies pushed down the national average by ¥12, including the effects of additional subsidies invoked when the average reaches a preset level.
In response to concerns that gasoline prices will jump if Japan ends the subsidy program, Prime Minister Fumio Kishida last Tuesday instructed the LDP-led ruling camp to compile by the end of this month measures to tackle surging fuel prices.
Besides the subsidy extension, the LDP's proposal calls for the continuation of a program to curb electricity and gas costs, also set to expire at the end of September.
Komeito, the LDP's junior coalition partner, will also hold a meeting Wednesday to discuss the gasoline subsidy program.