Drivers looking to fill their tanks lined up Tuesday in front of service stations nationwide as the "temporary" surcharge on the gasoline tax expired.

Drivers hoping to fill their tanks with cheaper gas form a long line in front of a service station Tuesday. KYODO PHOTO

Following the end of the ¥25 per liter surcharge, retailers are estimated to have marked prices down by an average of ¥20 per liter, industry observers say.

At 2 a.m., 12 tank trucks began fanning out from a refinery in Yokohama operated by the top distributor, Nippon Oil Corp., and headed for gas stations around the greater Tokyo area.

One station in Osaka Prefecture put up a discount sign a little after midnight and mobilized double the usual number of workers in anticipation of a particularly busy day.

Chuwa Petro Co., a Sapporo-based gas station operator, said one of its outlets took ¥25 of its price, selling gas for ¥122 a liter.

"I didn't buy gas yesterday (waiting for the price to come down)," said a 45-year-old Sapporo office worker. "I commute by car so the price cut means a lot to me."

One consumer expressed skepticism about the price decline. "The cheaper the better, I know, but the pricing policy seems rather haphazard," said Fukuoka restaurateur Daiji Hatase, 63.

Industry watchers fear the higher tax's expiry leaves retailers no choice but to offer discounts, often at a loss.

"If we don't lower the prices, customers will complain. But the price cut is hurting our business," said Kenjiro Sugisawa, sales manager of Chuwa Petro.

Still, the picture is likely to be mixed on the price front because some retailers are maintaining their prices until they have sold all the gas they procured before the extra levy expired Monday.

Gas retailers and wholesalers alike are at the mercy of the logjam resulting from the stalled Diet tax debate.

"We can't estimate how much demand will spike if the government manages to put the surcharge back in place by the end of this month and consumers try to beat the tax rise, so we aren't sure whether we can meet all our customer needs around that time," a gas station operator in Fukuoka said.

Nippon Oil's gasoline shipments dropped some 20 percent from a year ago Monday as customers waited for the price cut, but orders jumped 26 percent the next day compared with last April's average, according to the company.

Officials said the expiration of the surcharge, if left unaddressed, will result in a tax revenue shortfall this fiscal year of ¥1.7 trillion for the central government and ¥900 billion for local governments.

The surcharge, though called provisional, was extended many times to fund the buildup of the national highway network since it was first introduced in 1974. This is the first time it has expired.

Prime Minister Yasuo Fukuda's government aims to reinstate the surcharge, again putting the matter to a vote April 29 or later in the House of Representatives.

"It is quite deplorable that the tax surcharge expired," said Tetsuzo Fuyushiba, the minister of land, infrastructure, transport and tourism, after the day's Cabinet meeting. "We need to get relevant tax legislation enacted as soon as possible."