Japan Official Suggests Review of Gasoline Subsidies Due to Rising Costs

LDP Secretary-General Shunichi Suzuki suggested a review of government gasoline subsidies on Saturday, citing a heavy fiscal burden on the state [1, 2].

This shift in rhetoric signals a potential end to a critical price-control mechanism that has shielded Japanese consumers and businesses from global energy volatility. Any reduction in support could lead to a sharp increase in pump prices across the country.

Speaking at a Liberal Democratic Party meeting on May 23, Suzuki said the government has worked to keep the national average price of regular gasoline at approximately 170 yen per litre [1, 2]. He noted that the current program imposes a significant financial strain and said, "Since it is a very heavy fiscal burden, we must think carefully about the future" ^[1].

Financial data highlights the scale of the expenditure. Nomura Research Institute estimates that providing a subsidy of 10 yen per litre for one month costs approximately 100 billion yen ^[1]. However, the actual burden has fluctuated; some reports indicate spending reached approximately 180 billion yen in March 2026 ^[5].

To maintain the target price, the government increased the subsidy to 41.8 yen per litre effective May 21 ^[1]. This has kept the national average price at 169.2 yen per litre ^[1]. Despite these efforts, analysts warn that if subsidies of around 40 yen per litre continue, the existing fund may be depleted by the end of next month ^[1].

To combat this shortfall, the government has allocated approximately 800 billion yen from the current fiscal year's reserve budget ^[6]. Despite this injection of funds, the sustainability of the program remains a central point of debate within the party, as the government balances inflation relief against fiscal discipline.