Down to 85 Yen per Liter into 2016?

Gas stations  in town are waging against one another a never-ending war of gasoline price cut. The crude oil continuing to dwindle, the price of gasoline keeps on dropping and, according to the Agency of Natural Resources and Energy, the nationwide average gasoline price as of December 21 was 123.5 yen per liter, the lowest in six years and six months. The gasoline wars along major trunk roads are fiercer than ever.

It's a good news for consumers but bad for some gas stands which were picked on charge of illegal dumping. Short of warning, quite a few gas stands are said to sell below cost. Besides the cheap crude, there is a structural problem that is causing the overheating gasoline price war.

In November, a gas station in Tokoname, Aichi, momentarily sold a liter of gasoline for 85 yen, 40 yen below the nationwide average. As a US membership super Costco put up a stand of its own, the local stands challenged with lower prices to start an endless below-cost race. That lasted for 10 days and settled on 100 yen per liter - meaning the below-cost battle had lasted at least for 10 days.

The Fair Trade Commission warned on December 24 against two dealers including Kawasaki's Costco Wholesale Japan on antitrust violations.

The Ministry of Economy, Trade and Industry says there are about 33,500 gas stations across the country as of the end of March, 2015, 1,200 less than the previous year. Due to more eco-cars on the road and young drivers fewer in number, the total retail sale of gasoline downed by 4.5% over the previous year to 53 million kiloliters in 2014. The price down continued in 2015 but did not lead to demand rise. The Petroleum Association of Japan reports the domestic shipment over the period December 13-19 downed 2% below the same term the previous year.

The gasoline price bargain sale is likely to persist some time yet. 

News Source: Nikkei Shimbun