TOKYO - Japan will urge petroleum-producing nations to raise output and ease the soaring global oil prices that have hurt both corporate earnings and household budgets.
The plan to lobby oil producers, in collaboration with the International Energy Agency, is based on directives by Prime Minister Fumio Kishida. Tokyo also looks to offer state support for affected industries, as officials from relevant ministries met on Monday to discuss ways to address oil price rally.
The government as a whole will respond to make sure there is no disruption to industry or the everyday lives of citizens, said Chief Cabinet Secretary Hirokazu Matsuno, who attended the meeting.
The national retail price of gasoline averaged 162.10 yen per liter on Oct. 11 according to the Ministry of Economy, Trade and Industry, a high not seen in nearly seven years. This drag on households and businesses is because Japan seeks an economic recovery from the COVID-19 crisis in Japan.
Tokyo will work with the IEA and ask Saudi Arabia to boost output. OPEC Plus, which includes non-OPEC states like Russia, decided Oct. 4 to keep November production in line with an existing agreement.
Oil producers are gradually on site unwinding production cuts agreed in May 2020 in response to the coronavirus pandemic. Koichi Hagiuda, the Minister of Commerce and Industry, said after Monday's meeting that he intends to talk with oil producers ahead of the OPEC Plus meeting scheduled for early November.
I look to prepare my petitions to OPEC nations through direct talks online, he told reporters.
Foreign Minister Toshimitsu Motegi met with Kuwaiti counterpart Ahmad Nasser Al-Mohammed Al-Sabah Monday by phone, in the Persian Gulf region, to ask for the Kuwaiti partner to stabilize the market including via greater crude production.
If this lobbying effort bears fruit it is unclear when it will bear fruit, or in what fashion. Tokyo is encouraging domestic sectors that are heavy oil consumers to tap Japan's support programs.
Fishing boat operators may be compensated when crude prices exceed a certain threshold, or during sudden price spikes. The oil rally dating from the end of 2020 means that disbursements will apply to impacts from January onwards.
However, many fishers appear unaware of the program, so leaving the Ministry of Agriculture, Forestry and Fisheries to get the word out. The government would also offer similar relief for greenhouse farmers, who are dealing with higher heating costs. The payouts will be applicable from March.
The trucking industry is also facing high fuel prices. A government guidanceline from 2008 advises transport businesses to pass on extra fuel costs to transportation fees, but many of the companies lack such leverage with shipping clients.
The ministry of transport provides consulting services to trucking operators in which shipping clients suspected of engaging in illegal practices are pressured to institute reforms. The ministry will crack down on the offenders through this process. We will provide similar consulting services to mid-sized and small businesses.
China announced last month that it would release part of its petroleum reserves to market for the first time, looking to fight higher oil prices. But the Japanese officials did not adopt this policy on Monday, staying in line with the vast majority of other countries.
Japan has authorized the release of private-sector petroleum reserves in multiple instances, such as when the Gulf War occurred in 1991 and in the aftermath of the 2011 earthquake and tsunami that struck northeastern Japan. But such measures are taken when supply shortages are feared. The relevant law carries no provisions for setting reserves to combat high oil prices.