Japan is facing its most severe fuel price crisis in decades, with average gasoline costs reaching a record 190.8 yen per liter. The sudden 29-yen jump as of March 16 has raised fears that prices could soon top 200 yen. The Oil Information Center reports that this is the highest price ever recorded, surpassing the peaks seen in late 2023.
The primary cause of the inflation is the military tension in the Middle East, which has disrupted global oil markets. After the attack on Iran, oil prices fluctuated wildly, at one point reaching $119 per barrel. Wholesalers responded by raising gasoline prices by 26 yen per liter, forcing retail stations to adjust their price boards upward.
To alleviate the pressure, the government is introducing a subsidy of 30.2 yen per liter on March 19. This is intended to incentivize wholesalers to lower their rates, eventually bringing retail prices down to about 170 yen. However, a “inventory lag” of one to two weeks is expected before the average consumer feels any relief at the pump.
Until the subsidies take full effect, the Japanese economy remains under strain. The transportation sector and small businesses are particularly vulnerable to these record-high costs. The government’s decision to act highlights the urgency of the situation as the war in Iran continues to destabilize international trade.