Japan fuel prices fall after government oil subsidies return

The average retail price of regular gasoline in Japan fell 13.1 yen from a week earlier to 177.7 yen per litre as of March 23, marking the first decline in six weeks, the industry ministry said Wednesday (March 25).

The drop came after the government resumed subsidies for oil wholesalers last week, in the face of surging crude oil prices amid the deteriorating situation in the Middle East.

The decline is the second-largest single-week fall on record, following a 21.7-yen drop just after the provisional gasoline tax rate expired in 2008.

Still, the average gasoline price remains elevated. In mid-February, it hovered at around 150 yen per litre.

Among the country's 47 prefectures, Fukui saw the largest average price drop, at 20.7 yen. The average price fell below 170 yen only in Saitama, at 169.4 yen.

In Yamagata, the average price fell to 181.1 yen after hitting the highest level as of March 16, above 198 yen.

Meanwhile, the average price in Okinawa jumped 30.8 yen to 227.1 yen, apparently reflecting a delay in the effects of the government subsidies due to geographical and other factors.

To ease oil supply concerns and stabilise prices, the government will release state oil reserves starting Thursday, in addition to tapping into private-sector reserves.

Amid Iran's de facto closure of the Strait of Hormuz, a key oil transport waterway, the average gasoline price hit a record high of 190.8 yen per litre as of March 16, up 29 yen from a week earlier, which matched the largest single-week rise on record.

For the week from Thursday, the government will provide subsidies of 48.1 yen per litre, up from the previous week's 30.2 yen, as it aims to push the average gasoline price down to around 170 yen.

[Copyright The Jiji Press, Ltd.]