Oil Report

Japan highway toll discount to boost gas demand

TOKYO, March 27 (Reuters) - Sales of gasoline in Japan may rise this year for the first time in four years, industry sources said, helped by government plans to introduce highway toll discounts.

A poll by the Nikkei Research Institute of Industry and Regional Economy showed a third of people who have cars at home would drive more during the spring holidays. Many analysts expect the toll measure could boost long-distance driving.

Motor fuel demand in the world’s third-biggest oil consumer fell 4.2 percent last year, the sharpest decline on record, to below 1 million barrels per day.

Oil refiners, facing continued falls in oil demand mainly due to the weak industrial sector, are projecting a recovery in demand, which was battered by last year’s record oil prices.

"I have hopes for gasoline demand," Akihiko Tembo, the refinery association's chairman, also president of Idemitsu Kosan Co 5019.T, told reporters last week. "I don't anticipate a huge gain, but demand may be firm in some seasons."

From Saturday, the government will implement a 50 percent discount on the nation’s highway tolls for passenger cars and motorcycles equipped with electronic toll collection (ETC) systems. The toll will have a ceiling of a maximum of 1,000 yen ($10) irrespective of the mileage driven.

The measure will be in effect during weekends and national holidays until the end of March 2011. In and around the major cities of Tokyo and Osaka, there will be a 30-50 percent discount on tolls but no ceiling. There are also some discounts for weekdays but no ceiling in tolls.

The measure will be a relief for long-distance drivers as normal tolls for highway use of 680 km (400 miles) can reach about $140.

About 23 million vehicles, or 30 percent of the total, are fitted with ETC systems. Since the toll discount was announced, ETC systems have been selling strongly.

A plunge in global oil prices from the record highs of last July has helped boost gasoline demand in recent months. The trade ministry’s data showed domestic gasoline sales rose 4.1 percent in December from the same month a year ago, followed by a 0.8 percent gain in January. ($1=98.25 Yen) (Reporting by Osamu Tsukimori)