Japan Weighs Gasoline Subsidy Cuts to Offset Energy Costs

The Government of Japan is considering a reduction in financial subsidies for retail gasoline prices beginning in December 2026. These subsidies were first introduced in March to stabilize national average prices at $1.09 per liter following the outbreak of war in the Middle East. However, the program currently costs Tokyo several billion dollars monthly.

Proposed scale-backs would allow the average price to rise to $1.11 per liter in December and $1.15 per liter in January. This policy shift follows the depletion of a $19 billion emergency budget approved in May, which was exhausted by sustained energy price spikes linked to the ongoing conflict involving the United States, Israel, and Iran.

To mitigate the financial impact on consumers, the government is weighing a complementary tax cut for food and beverages scheduled to start in April 2027.