THE ASAHI SHIMBUN
November 25, 2021 at 15:02 JST
The national oil stockpile base in Tomakomai, Hokkaido (Kotaro Ebara)
Government officials are defending the controversial decision to dip into the state’s oil reserves to hold down rising gas prices by arguing that it had to be done anyway.
Officials insist they are simply pushing up the scheduled replacement of that petroleum by selling off a certain volume, as requested by the United States.
They are relying on the linguistic acrobatics to justify the move because the law does not allow for releasing oil stockpiles simply to suppress prices, according to observers.
Japan’s oil stockpile can only legally be released in the event of a natural disaster or if a shortage is forecast due to an overseas military conflict.
That has forced government officials to say that stockpiled oil equivalent to several days of domestic demand will be auctioned off as part of normal inventory replacement.
This will be the first time Japan has ever tapped into its national oil stockpiles.
An oil replacement purchase was planned for next fiscal year, but it has been moved up. However, officials have not said when replacement oil will be purchased, leading to speculation that the government’s argument is simply intended to get around legal wording.
Economy ministry officials have repeatedly said the law never intended for oil stockpiles to be released to hold down gasoline prices.
The periodic replacement of the oil stockpile is only limited to a few days’ supply.
But therein lies the rub. Not only is there no plan to purchase oil to replace the released amount, but the volume to be sold off is so small that doubts are being raised about whether the move will actually hold down gas prices at all.
Government officials have been asking petroleum-producing nations to increase their output, so some are expressing concerns that this latest move will make these nations even more hesitant about increasing production volume.
All the while, the government is holding its cards close to its chest. While Prime Minister Fumio Kishida explained on Nov. 24 that the decision to release state oil reserves was intended to work in conjunction with the United States, he never explained why there was a need for such cooperation.
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