As Japan's reliance on thermal power generation increases following the Fukushima nuclear crisis, and as the possible blockade of the Strait of Hormuz cannot be ruled out due to the conflict between the West and Iran over Tehran's nuclear program, Japan must strive to diversify sources of liquefied natural gas imports. The efforts must be pursued even though the United States will exempt Japan and 10 European countries for 180 days from its new financial sanctions against Iran.
At the same time, since their profit margin is fixed, Japanese power companies have no incentive to purchase LNG at lower prices compared with other countries. They know they can automatically pass their increased fuel costs on to consumers. The government should change this system so that power companies make serious efforts to buy cheaper LNG and lower electricity prices.
About 60 percent of LNG imported by Japan is for use as fuel at thermal power stations and about 20 percent comes through the Strait of Hormuz. More important, Japan relies on the Mideast for 90 percent of its crude oil, and most of it comes through the strait.
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