Japan Mulls Releasing Crude Oil Reserves to Reduce Prices

The Japanese government is considering plans to release part of its crude oil reserves at state storage facilities to help counter rising gasoline prices.

Temporarily increasing the supply of gasoline would also allow for the revenues from the sale to be used as a subsidy to petroleum companies under a separate measure being pushed by the government.

The state is legally obliged to stockpile enough petroleum to provide at least a 90-day supply while the private sector is obligated to store at least a 70-day supply.

One measure being considered is to revise the law regarding state stockpiling to allow for a lower storage volume, government sources said.

Normally, the stockpile volume can only be lowered when natural disasters strike or when an energy crunch emerges due to a military conflict overseas.

There have been past examples of the private sector lowering its stockpile, such as during the 2011 earthquake and tsunami disaster and the Persian Gulf War.

But there has never been a case of lowering the stockpile volume simply to keep gasoline prices in check. This would mark the first time for the state stockpile to be tapped.

The move follows reports that the U.S. government has asked China and Japan to join in a cooperative effort to release crude oil stockpiles to lower energy prices.

The subsidy program to petroleum companies is also designed to keep gasoline prices from rising too rapidly. The plan calls for providing the companies with subsidies of up to 5 yen per liter when the average retail price of regular gasoline tops 170 yen ($1.50) per liter. The subsidy will also apply to sales of kerosene, light oil and heavy fuel oil.

Plans call for the subsidy program to begin in December and last until March.

November 20, 2021