Japan’s Energy Crisis: How Rising LNG Prices Will Impact Your Electricity Bills This Summer

Translation result Prime Minister Sanae Takaichi said she is considering a supplementary budget to prepare for a prolonged rise in energy prices amid worsening tensions in the Middle East. On the 18th, NHK and Kyodo reported that Takaichi formalized the move at a government–ruling-party liaison meeting, saying the government will explore measures to blunt the economic impact, including inflation. Takaichi ordered Finance Minister Satsuki Katayama to review funding options that could include a supplementary budget. The step responds to an energy squeeze tied to a potential blockade of the Strait of Hormuz: liquefied natural gas (LNG) prices for thermal power have surged, and utilities are expected to raise electricity and gas rates starting next month. Higher summer bills will especially strain ordinary households because air-conditioner use peaks in the season. Takaichi urged the Liberal Democratic Party and coalition partner the Japan Innovation Party (Nippon Ishin) to quickly draw up concrete relief measures, asking them to ensure bills from July through September—the months of highest usage—remain below last summer’s levels. Kyodo, citing multiple government sources, said the supplementary budget will likely total several trillion yen (roughly several tens of billions of USD), smaller than the extra-budget packages typically compiled after autumn and far more limited than the ¥18.3034 trillion package that passed parliament last December (approximately $122.6 billion). Officials expect to finance the new package mainly by issuing additional government bonds. After the meeting, Takaichi told reporters she would weigh fiscal discipline as well: “We must control special deficit-covering bonds even as we act.” Limits on existing funds also accelerated talks on a supplementary budget. Since March, the government has subsidized refiners to stabilize gasoline prices, but the fund for those subsidies is expected to be exhausted next month. Observers say this fiscal year’s contingency reserve of ¥1 trillion (approximately $6.7 billion) will not be sufficient to cover both summer electricity and gas subsidies. Takaichi had previously taken a cautious stance—saying an immediate supplementary budget was not necessary—but the prolonged deterioration of Middle East tensions and resulting energy-price pressures appear to have prompted a policy shift.