Japan OKs use of 600 bil. yen in emergency funds for gasoline subsidies

Japan's Cabinet has approved the use of 616.0 billion yen from its emergency reserve funds for the current fiscal year to address rising gasoline prices, amid heightened tensions in the Middle East. Out of this substantial sum, 613.6 billion yen will be allocated to maintain government subsidies for retail gasoline prices, which are currently maintained around 170 yen per liter to alleviate financial burdens on households and businesses.

The government originally set aside around 1.2 trillion yen for these subsidies, but as of the end of July, approximately 80 percent had been spent, leaving about 210 billion yen remaining. Additionally, 2.4 billion yen will be distributed to support taxi firms that utilize liquefied petroleum gas as fuel. Prime Minister Sanae Takaichi recently directed industry minister Ryosei Akazawa to deploy a portion of the 2.5 trillion yen in fiscal 2026 reserve funds, set aside for the government's response to the ongoing U.S.-Iran conflict that began in late February.

Japan, which is resource-scarce and heavily reliant on energy imports from the Middle East, faces challenges as supply has been impacted by the effective closure of the Strait of Hormuz due to the war, leading to a surge in global oil prices.