The government plans to provide subsidies to oil wholesalers if domestic gasoline prices surpass certain levels, industry minister Koichi Hagiuda said Tuesday.
The financial assistance is aimed at encouraging oil distributors to limit their wholesale prices in order to prevent an excessive rise in retail gasoline prices amid crude oil price surges.
The aid program has no precedent in Japan, according to government officials.
The government plans to include the measure in its economic stimulus package to be adopted on Friday, hoping to start the aid by the end of the year.
“We’re looking at a temporary measure of supplying wholesalers with financial resources to curb prices and averting a sharp increase in retail prices,” Hagiuda told reporters.
Crude oil prices have been soaring, pushed up by robust demand stemming from the economic recovery amid signs of the novel coronavirus pandemic subsiding.
In response, gasoline prices in Japan have been on the increase, with the average regular gasoline price standing at ¥169 per liter as of Nov. 8, the highest level in about seven years and three months.
The government is weighing a program of providing subsidies to oil wholesalers if regular gasoline prices exceed ¥170 on average, according to informed sources. A plan being studied calls for a subsidy limit of ¥5 per liter, the sources said.
The government is also discussing whether the aid program should cover other petroleum products, such as kerosene.
An oil industry official noted that retail gasoline prices will differ among service stations and regions even if the proposed subsidies are introduced. “The government should give careful explanations in order to prevent the misunderstanding that retail gasoline prices won’t go above ¥170 under the aid program,” the official said.
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