Key Facts
• November 5: Six political parties agreed to abolish the provisional gasoline tax.
• Provisional tax of 25 yen per liter to end by December 31, 2025.
• Subsidies to increase from November 13, starting at 10 yen per liter.
• Subsidy increments: 5 yen every two weeks, reaching 25 yen by December 11.
• Gasoline prices expected to drop to 160 yen per liter by year-end.
• Current crude oil prices remain stable, supporting the price drop forecast.
• Subsidies paid to oil wholesalers; retail price adjustments take 2–3 weeks.
• Risks: Middle East and Ukraine conflicts may offset subsidy effects.
Summary
Japan’s gasoline prices are projected to drop to 160 yen per liter by the end of 2025, marking the lowest level in four years. This follows the November 5 agreement by six political parties to abolish the provisional gasoline tax of 25 yen per liter by December 31. To mitigate the impact, subsidies will increase incrementally from November 13, starting at 10 yen per liter and reaching 25 yen by December 11. These subsidies, paid to oil wholesalers, are expected to lower retail prices within 2–3 weeks. Stable crude oil prices support this forecast, but geopolitical risks in the Middle East and Ukraine could undermine the subsidy’s effectiveness.
