Oil prices remain high for a long time, household support is reduced, and there is no end in sight after the US mid-term elections

The Democratic Party, which had criticized military operations against Iran in the US midterm elections, took back both houses of Congress, and oil prices fell. However, the end of the situation remains uncertain. The Japanese government decided to reduce gasoline subsidies due to concerns about the fiscal burden. This places a burden on households and businesses.

Democratic Reform representative Junya Ogawa criticizes government energy aid as “ad hoc”

On the 4th, Vice President Vance of the United States announced on social media that the reason for the Republican Party's defeat was the attack on Iran. Expectations for an end to the fighting have spread in the crude oil futures market, and WTI, the standard oil produced in the United States, which was priced at around $100 per barrel in late October, temporarily fell below $90.

However, it is far from the high $60s that it was before the military conflict. If Iran maintains its hardline stance following the election results, negotiations could stall and prices could remain high.

Yuki Takashima, an economist at Nomura Securities, points out that even if the U.S. and Iran reach an agreement and oil prices fall, shipping costs for shipping will remain high for the time being. ``Import prices seem to be coming down slowly,'' he said.

In response to the prolonged rise in crude oil prices, the government has taken a step toward reducing gasoline subsidies. Since March, the retail price of regular gasoline has been kept at a national average of 170 yen per liter, a level lower than that of Western countries, but this was revised to 175 yen in December. After that, the plan is to raise the rate by 5 yen a month.

The amount of subsidies paid by the end of October amounted to approximately 1.5 trillion yen, with the aim of putting a brake on the expansion of fiscal spending. However, a rush to raise the prices of daily necessities such as food is putting pressure on household budgets, and the government has not been able to officially decide on a hike starting in January next year. A senior official at the Ministry of Economy, Trade and Industry is closely monitoring trends in public opinion, saying, ``We have limited options to deal with rising prices, so the question is how to react domestically.''