Japanese media: Oil subsidies will bottom out in three to four months; the Japanese government will eventually run out of options

Source: Overseas Network

Overseas Network April 2nd — Japan’s “West Japan News” published an article titled “Oil Shortage: LDP Internal Doubts: The Government Will Fall Into a Dead End” on April 2nd, stating that in the face of a long-term oil shortage crisis, the Japanese government’s response capacity is weak. Coupled with rising prices and yen depreciation, the Takashi Hoshi government will eventually be cornered.

Due to heavy reliance on Middle Eastern imports, gasoline prices in Japan have recently surged. In mid-March, the Japanese government released oil reserves to ease the rising oil prices caused by tense situations, and resumed providing price subsidies to oil wholesalers in an attempt to calm public anxiety. However, “West Japan News” believes that, in the face of a long-term oil shortage, these measures by the Japanese government appear weak. The current subsidy balance of the Japanese government is about 280 billion yen (approximately 12.1 billion RMB), and about 800 billion yen (approximately 34.5 billion RMB) has been spent from the annual budget reserve as subsidy funds. Even so, a Ministry of Finance official estimates that these funds will be exhausted within three to four months.

“West Japan News” states that even if the Middle East situation eases, due to damaged oil facilities and uncertain conditions in the Strait of Hormuz, the supply constraints and high prices of crude oil will persist. Mitsubishi UFJ Morgan Stanley Securities in Japan has estimated that if oil product demand remains at current levels and the current subsidy policy is maintained for a year, costs could reach 5 trillion yen (about 216.2 billion RMB). Japanese Chief Economist Yamaguchi Takeshi said, “The current oil support mechanism in Japan is difficult to sustain.”

Former Japanese Foreign Minister Taro Kono, Senate Audit Committee Chairman Junzo Yamamoto, and other politicians have called on the government not to rely solely on subsidies but to ask the public to save energy, such as promoting working from home and public transportation. However, the Japanese government, considering economic development needs, has been passive toward such measures. Some within the Liberal Democratic Party question that Japan’s ongoing price increases and yen depreciation are putting enormous pressure on the country. Coupled with the oil shortage crisis, the Japanese government will eventually find itself increasingly cornered. (Overseas Network Wang Shanning)

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