April 21, 2024 14:30 (Japan time)
We should not continue to spend huge sums of money to keep gasoline prices down. Government petrol subsidy schemes should be phased out and eventually ended.
The government has decided to extend gasoline subsidy payments beyond May. The subsidies were scheduled to begin in January 2022 and end in April due to soaring oil prices.
The gasoline subsidy was initially seen as a temporary measure that would last about two months. However, due to soaring oil prices due to factors such as Russia's invasion of Ukraine, the deadline has been repeatedly extended. This is the seventh extension.
Up until now, each time the subsidy system has been extended, a new end date has been announced, but no deadline has been set this time. Isn't the government unable to end the subsidy system because it is afraid of public backlash if the subsidy is cut off?
Subsidies are given to oil distributors to keep wholesale prices down. The national average price of regular gasoline has been adjusted to around 175 yen per liter. Without subsidies, the current price of gasoline is said to be more than 200 yen per liter.
Nearly 5 trillion yen has been invested so far, and all citizens, including the wealthy and large corporations, are benefiting equally. However, criticism has surfaced over the huge amount of money invested.
Effective fiscal spending should be focused on small and medium-sized transportation companies. These businesses are suffering from a decline in transportation capacity due to a shortage of truck drivers and soaring gasoline prices.
With the prices of many daily necessities including food soaring, it is questionable that the government is only subsidizing gasoline costs to support household budgets.
It is not appropriate to continue this policy, which ignores the price-setting mechanism, indefinitely.
Furthermore, this subsidy system runs counter to the government's efforts to promote decarbonization. In fiscal 2022, carbon dioxide emissions from the industrial sector decreased by 5.3% compared to the previous year, but carbon dioxide emissions from the transportation sector increased, and emissions from private vehicles increased by 7.2%.
Subsidies may be causing people to use public transport less, resulting in less gasoline usage.
Oil prices are once again at high levels due to tensions in the Middle East. Coupled with the weak yen, it is difficult to expect gasoline prices to fall in the future. It is important to build an economic structure that can withstand rising fuel prices while gradually reducing subsidies.
Rather than handing out subsidies blindly, the time may have come to allocate funds to popularize electric vehicles and support research and development of energy-saving technologies.
(From Yomiuri Shimbun April 21, 2024)
