Business

If tension persists, higher crude oil prices could hit Japanese consumers on everything from airplane tickets to electric bills

JIJI

Attention is being paid to the course of crude oil prices following a surge stemming from Saturday’s attacks on oil facilities in Saudi Arabia, with higher prices, if prolonged, seen as likely to affect firms and households in Japan.

“Developments similar to those during the oil crises in the 1970s will not happen,” said Kengo Sakurada, head of the Japan Association of Corporate Executives, or Keizai Doyukai, during a regular news conference Tuesday, noting that the United States is becoming a net exporter of crude oil and that Japan has oil reserves.

Sakurada pointed out, however, that his prediction will prove inaccurate if higher crude oil prices continue for a year or longer, or if an armed clash occurs.

Japanese oil wholesalers have been procuring more crude oil from Saudi Arabia amid intensifying tensions over Iran. Crude oil prices “will not fall back to the levels before the attacks unless the safety of Saudi Arabia’s air defense is secured,” an industry official said.

A surge in crude oil prices may be passed on in electricity bills as early as December. The average retail price of regular gasoline, which has been on a declining trend and stood at ¥143 per liter as of Sept. 9, “may turn up and top ¥150,” one industry source said.

Demand for overseas trips may drop if the rising crude oil prices lead to a hike in fuel surcharges for international flights.

“From a long-term viewpoint, the crude price surge may dampen the economy and consumption, and affect logistics costs,” said an official at Asahi Group Holdings Ltd.

A representative for an operator of a sentō public bath facility said, “While we see no need to raise admission fees at the moment, we’re keeping close tabs on future developments.”