Is Japan still holding oil by the end of September?

There’s a pitfall many people overlook: Japan holds mostly crude oil in reserve, with very little refined petroleum product stock. This round of releases primarily targets reserves held by private enterprises—and even the legally mandated minimum reserve requirement for businesses has been lowered, significantly thinning companies’ safety margins. Japan imports 90% of its crude oil, and 70% of that passes through the Strait of Hormuz. To diversify supply, it’s now trying to import more from Canada and West Africa—but those routes are much longer, driving up freight and insurance costs substantially. Many assume that ample crude oil reserves guarantee uninterrupted industrial feedstock supply—but that’s not the case. Gasoline and diesel supply remains relatively stable: the government is releasing reserves while simultaneously providing subsidies, so there are no gas station queues, thermal power generation and freight transport remain normal, and factories relying solely on fuel have not experienced large-scale shutdowns. The real pain point lies along the petrochemical chain—specifically, naphtha. Most of Japan’s naphtha is imported from the Middle East; it serves as the key feedstock for ethylene and propylene, which underpin plastics, automotive interior components, and medical consumables. By mid-year, ethylene plant utilization rates had dropped to their lowest level in decades. Major producers—including Mitsubishi Chemical and Shin-Etsu Chemical—cut output, pushing up resin prices. The ripple effects followed: food manufacturers simplified packaging and eliminated color printing; supplies of medical gloves and dialysis consumables grew tight. Automakers could still assemble vehicles, but rising plastic component costs eroded profit margins. The most acute phase has passed, thanks to imports of finished chemical products to fill gaps—but raw material prices remain stubbornly high, squeezing petrochemical plants’ gross margins. Appliances and complete vehicle manufacturing face higher costs but no production halts. Production continues, though upstream component prices have risen—and with maritime shipping rerouted, export logistics have become costlier, forcing firms either to absorb the margin hit or pass costs on to downstream buyers. Machinery and metal processing are minimally affected by fuel costs; the main drag is weak market demand. In short, reserves can only buffer short-term disruptions to shipping lanes—not long-term high oil prices. Fuel supply is relatively secure, but petrochemical feedstocks represent the most vulnerable link in Japan’s industrial chain.

Japan plans to cut taxes by ¥40,000 and subsidize low-income households by ¥70,000! Will monthly salaries rise by over ¥30,000 next year?

The Liberal Democratic Party’s Tax System Research Council convened a meeting to discuss a flat-rate tax reduction—deducting a fixed amount directly from taxpayers’ tax liabilities—as its centerpiece proposal. It put forward a plan to reduce income tax and other taxes by ¥40,000 per person, and to provide a ¥70,000 subsidy to non-taxable households, with special support targeted at working-age individuals and low-income groups. According to the National Tax Agency’s 2022 Survey on Actual Wage Payments, there were 50.78 million full-year wage earners in Japan, with an average annual income of ¥4.58 million. The vast majority will qualify for the ¥40,000 tax reduction. Households with annual incomes below ¥1.03 million are generally exempt from income tax; correspondingly, the number of wage earners earning less than ¥1 million annually stands at 3.985 million—7.8% of the total workforce—who will be eligible for the ¥70,000 subsidy. The government plans to hold a policy consultation meeting on October 26 to issue more concrete instructions on income tax reductions to both the LDP and Komeito parties. Implementation will require legislative amendments, meaning the earliest possible rollout would be spring next year—or later. Still, regardless of timing, the ¥40,000 tax cut will offer tangible relief for household budgets. Teikoku Databank estimated, based on this year’s rising food prices and household consumption data, that Japanese households’ monthly food expenses (a major component of household budgets) will increase by up to ¥4,058 compared to last year—adding roughly ¥48,000 annually to household spending. If implemented as proposed, the government’s tax reduction scheme would essentially offset the added financial burden caused by rising food prices. Beyond tax cuts, the Japanese government decided on October 24 to extend all existing subsidies—including those for gasoline and other fuels (set to expire at year-end), as well as assistance programs aimed at curbing electricity and city gas bills—through the end of April next year.

Japan Plans to Reduce Gasoline Subsidies Starting December

2 days ago

Japanese PM Takaichi announced plans to raise gasoline pump prices by 5 yen monthly from December to curb subsidy costs exceeding 10 billion yen daily, while monitoring crude oil price trends.

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