TOKYO: The Japanese government’s subsidies provided to oil wholesalers to help slow surges in gasoline prices will reach its upper limit on Thursday, it was learned Friday.

The amount of subsidies will rise to 5 yen per liter, the maximum amount allowed under the program, only two weeks after the government started paying subsidies, because crude oil prices are rising steeply amid fears over a Russian invasion of Ukraine.

If crude oil prices continue to surge, the government may need to consider additional measures to curb gasoline price increases.

On Thursday, the benchmark contract on West Texas Intermediate crude oil futures topped 90 dollars per barrel for the first time in about seven years and four months, going higher than the level that had been assumed when the subsidy program was designed.

The subsidies, which are linked in part to crude oil prices, will theoretically need to be raised to around 5.20 yen in order to keep the national average of regular gasoline prices around the program’s standard level of 170 yen. Actually, the upper limit of 5 yen will be provided.

The government activated the subsidy program on Jan. 27, providing 3.40 yen to wholesalers, and boosted the amount to 3.70 yen from Thursday.

JIJI Press