Japan will start reducing its gasoline subsidies in December as part of a government plan to manage the financial strain from its energy support program while continuing to assist households facing high fuel prices. Prime Minister Sanae Takaichi announced the decision on October 29, stating that the subsidies were initially introduced to shield consumers from spikes in fuel prices due to global oil market volatility and Middle Eastern tensions.
The current government subsidy aims to maintain the national average price of regular gasoline at around 170 yen per liter. Beginning in December, this benchmark will increase by 5 yen each month as the government transitions toward a more sustainable subsidy model. Takaichi emphasized that factors such as crude oil prices, household expenses, and broader economic conditions will be considered in implementing these changes.
Japan’s gasoline subsidy program, which costs taxpayers over 10 billion yen daily, was first launched in 2022 but was halted after the temporary gasoline tax rate was abolished. It was reinstated in March in response to rising international energy prices, with subsidies exceeding 50 yen per liter. The total expenditure on the program reached approximately 9 trillion yen by September, leading to concerns about its impact on public finances and the use of emergency reserve funds.
In addition to modifying gasoline subsidies, Japan will also resume financial aid for electricity and gas bills from December through February to support households during the winter months. The initiative will provide electricity subsidies of 1 yen per kilowatt-hour in December and 4.5 yen in both January and February, potentially reducing a typical household’s energy expenses by about 7,000 yen over the three-month period.
The government plans to review further support measures for March, taking into account weather conditions and international energy prices. This policy shift reflects Japan’s effort to balance the affordability of household energy with the rising fiscal costs of maintaining extensive fuel and utility subsidies.
