Japan approves use of 616bil yen in emergency funds for gasoline subsidies

Japan's Cabinet has allocated 616.0 billion yen (US$3.9 billion) from its emergency reserve funds for the current fiscal year to address rising gasoline prices and the ongoing tensions in West Asia, according to Kyodo News. The majority of this allocation, 613.6 billion yen, will be used to maintain subsidies that keep retail gasoline prices around 170 yen per liter, thereby alleviating the financial strain on households and businesses.

The government had initially set aside about 1.2 trillion yen for these subsidies, with around 80% already spent by the end of July, leaving approximately 210 billion yen remaining. Additionally, 2.4 billion yen will be distributed to support taxi companies that utilize liquefied petroleum gas as their fuel source. Prime Minister Sanae Takaichi recently directed the industry minister to allocate a portion of the 2.5 trillion yen reserved for the government's response to the US-Iran conflict, which began in late February.

Given Japan's heavy reliance on energy imports from the volatile region and the recent closure of the Strait of Hormuz due to the conflict, global oil prices have surged.