Japan to Raise Electricity Rates Amid Rising Oil Prices

Japanese Government: "Negative Impact of 85 to 141 Trillion Won on the Economy"

As oil prices continue to rise due to escalating tensions in the Middle East, Japan's major electric power companies will simultaneously increase electricity rates next month.

Yonhap News Agency

According to the Nikkei on March 28, the household electricity rates announced by Japan's 10 largest electric power companies for April have risen by about 400 yen (approximately 3,760 won) compared to the previous month. This is the result of the Japanese government discontinuing the subsidies it provided from January to March this year to meet winter heating demand.

The Nikkei analyzed that if the blockade of the Strait of Hormuz continues for an extended period, fuel prices could surge, making it highly likely that electricity rates will rise further around June. Japanese electric power companies adjust electricity rates several months after changes occur in fuel costs for thermal power generation.

The Nikkei stated, "Currently, compared to the end of February, crude oil prices are about twice as high, liquefied natural gas (LNG) has risen by about 1.8 times, and coal by about 1.2 times," adding that if temperatures are higher than average this summer, increased demand for air conditioning could further burden households.

Chemical company Toray has introduced a system to impose surcharges on certain products, such as carbon fiber sold domestically and internationally, following a sharp increase in the price of naphtha, a byproduct of crude oil refining.

However, Toray also plans to adjust these surcharges not only when raw material prices rise, but also when they fall, in accordance with price changes.

In materials released to the public the previous day, Japan's Cabinet Office projected that rising prices for various resources could have a negative impact on the national economy of 9 trillion to 15 trillion yen (about 85 trillion to 141 trillion won).

The Cabinet Office also observed that a 10% increase in international oil prices could raise consumer prices by up to 0.3 percentage points year-on-year.

This content was produced with the assistance of AI translation services.