Japan cuts fuel subsidy for Feb 15-21 on weak crude oil prices

Japan has cut its fuel subsidy for refiners and oil products importers to Yen 19.40/liter (13 cents/liter) for the Feb. 15-21 period from Yen 19.80/l the week before, marking the second consecutive weekly decline, the government said Feb. 15.

The government, which reviews the subsidy every week, decided to lower it after the average price of Nikkei Dubai oil fell 0.8% on the week to $78.95/b over Feb. 6-9.

In the latest economic package announced in November, the administration led by Prime Minister Fumio Kishida said the fuel subsidies, which were scheduled to cease at the end of December 2023, would be extended until end-April to ease the burden on the public from prevailing high prices.

The extension of the fuel subsidy payment marks the sixth of its kind since the introduction at the end of January 2022.

The national average retail price for regular gasoline fell Yen 0.20/l on the week to Yen 174.40/l Feb. 13, marking a fifth consecutive weekly decline, according to the Oil Information Center.

The gasoil pump price slid Yen 0.20/l to Yen 154.10/l, while the kerosene price fell Yen 0.10/l to Yen 116.60/l, according to the center.

Without the subsidy, the retail price of gasoline would have risen Yen 20.20/l to Yen 194.60/l Feb. 13, the Ministry of Economy, Trade and Industry said Feb. 15.

The subsidy reduced gasoil and kerosene prices by Yen 20.20/l and Yen 20.10/l, respectively, the ministry said.

The government launched the subsidy program for gasoline, kerosene, gasoil and fuel oil in January 2022 to mitigate the effect of high oil prices on the economy as it recovered from the pandemic. It expanded the program in April 2022 to include jet fuel and LPG.

Refiners use the subsidy to curb increases in weekly wholesale prices of oil products, while trading houses deduct the subsidies from selling prices of imported oil products.