Key facts
- Japan will tap $7 billion from reserves to subsidize gasoline prices.
- Subsidies will be scaled back starting in December.
- The program began in March to counter high fuel import costs.
- The average gasoline price is capped at 170 yen per liter ($4.10 per gallon).
- Subsidies are costing Japan billions of dollars monthly.
Japan's government will allocate approximately $7 billion from its contingency reserves to continue subsidizing gasoline and other fuel prices, according to Japanese media reports on Friday. This measure comes as the country faces high oil and fuel import costs, exacerbated by the Middle Eastern war and disruptions to shipping routes like the Strait of Hormuz. The subsidy program, initiated in March, has maintained the average national gasoline price at 170 yen per liter ($4.10 per gallon). However, the ongoing cost of these subsidies is placing a significant burden on Japan's public finances. Starting in December, the government plans to gradually reduce the subsidies by increasing the retail gasoline price cap monthly.