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CHAPTER I
INTRODUCTION
Background of the Study

Oil plays an important role in the daily lives of consumers as it is used to power

transportation, heat homes and buildings, and as a raw material in the production of various

products. Oil is a major source of energy for electricity generation. As mentioned above, oil

prices indirectly affect costs such as transportation, manufacturing, and heating. The increase in

these costs can in turn affect the prices of a variety of goods and services, as producers may pass

production costs on to consumers.

The researchers found a significant positive effect of oil price increases on output growth

for net oil exporters, the effect was insignificant on the output growth of net oil importers.

Similar results have been reported for net oil exporters like Venezuela (Mendoza and Vera

2010). It was also discussed and analyzed by (Fatima and Bashir, 2014) that instabilities of oil

prices negatively affect the oil importing countries, mainly where weak policy framework exists,

low foreign exchange reserves, and restricted access to the international capital market. Among

the energy resources, oil has an important place in the economies of the countries because the

relationship between the economic performance of the countries and oil prices is quite high. It is

seen that the changes in oil prices according to the types of national economies affect the

country's economies positively or negatively (Mukhtarov et al. 2020). According to

(Kolaczkowski, 2022), he stated that the Oil accounts for approximately 3% of Gross Domestic

Product (GDP) and is one of the most important commodities in the world – petroleum products

can be found in everything from personal protective equipment, plastics, chemicals and

fertilizers through to aspirin, clothing, fuel for transportation and even solar panels.

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Because of the high price of oils, in USA most of the people tend to change their

cars from large sedan to medium or small sized Japanese Cars, even the well know

American automobile car producers introduce these (economical cars) to their production

lines. In other countries they even prefer riding bicycles as their transportation rather than

driving their cars as the oil price is very high and costly. Meanwhile here in the

Philippines, the inflation is inevitable and so does the oil price hike. There are many

products and goods that are so expensive and that most people can't afford to buy.

Especially for students here in Sta. Maria, wherein they find their fare hard to afford. The

students need transportation in order to get to school on time. The recent amount of fare

per student in Barangay Pilar was ₱7.00 and was escalated to ₱10.00 after the pandemic.

And now currently, the students in Barangay Pilar pays ₱ 12.00 just to get to school

(Eastern Pangasinan Agricultural College). Other students prefer to ride their bikes now

just to get to school. And because of how costly the fare was, other students sacrificed the

budget for their food to get to school and go home on time. Consumers like farmers get

affected too by the oil price. The machinery that they are using needs oil too, for it to

work. And many farmers failed to afford the right amount of oil they need, because of its

price. The reason why sometimes the country lacks some sources of food and ingredients,

and the reason for inflation too.

The Philippines is one of those countries who imports oil, just to have enough

supply, and as they import, the prices of oil changes and becomes higher, and that mainly

affects the consumers. An increase in oil prices can have a significant impact on

consumers, as it can lead to higher prices for goods and services that are transported

using oil. This can include food, clothing, and other everyday items. Additionally, higher
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oil prices can also lead to higher fuel costs for consumers, which can increase the cost of

driving and transportation. This can be particularly burdensome for low- income

households, who may spend a larger portion of their income on transportation costs.

However, lower oil prices can also be beneficial for consumers by lowering the cost of

goods and services, as well as transportation costs.

The oil price truly has a big impact on consumers in their everyday lives. The consumers,

as it may be farmers, students, normal residents, etc., are all greatly affected by the oil

price. A must need in everyone’s daily lives, the oil, but as everyone is greatly affected

by the prices of it, makes it harder to avail. Some may have the advantage to avail, but

most can’t. What matters to know is how the consumers in Sta. Maria are coping with

changes in oil prices. With all those being said, the researchers aim to know and

understand the impact of oil price on consumers in Sta. Maria.

Statement of the Problem

Increase in oil price has a significant impact on consumers. The effects of increase

in oil prices on consumers vary depending on the specific circumstances. In general,

when oil prices rise, the cost of producing and transporting goods also increases, leading

to higher prices for consumers. This can be particularly challenging for low-income

households and individuals.

The study was primarily focuses on finding and determining the impacts of oil

prices on consumers in Sta. Maria. Specifically, the study aimed to answer the following

question:

1. What is the impact of increase in oil price on the consumer’s job and businesses?
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2. How does the increase in oil price affect the consumer’s household expenses?

3. What are the effects of increase in oil price to the consumer’s overall spending on

transportation?

Significance of the Study

A study about the impact of oil prices on consumers in Sta. Maria would likely be

significant for several reasons.

Consumers. The study can increase consumer awareness about the link between oil

prices and the cost of goods and services. It can help consumers understand why prices

might be rising and how it directly affects their wallets. This knowledge allows

consumers to make more informed decisions and adjust their spending habits

accordingly.

Consumers' Jobs and Businesses. A research study on the increase in oil prices benefits

consumers' jobs and businesses by providing valuable knowledge and insights that can

inform decision-making, cost management, innovation, adaptation, and policy advocacy.

Future Researchers. The findings and analysis from a research study can serve as a

basis for formulating new research hypotheses. Future researchers can use the existing

research as a starting point to develop their own hypotheses, theories, or models to

investigate different aspects related to the increase in oil prices.

Conceptual Framework

A conceptual framework is a representation of the relationship you expect to see

between your variables, or the characteristics or properties that you want to study.
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Independent Variable
Type of vehicle/transportation
Dependent Variable
Fuel Consumption

Independent Variable
Location of the consumers

Theoretical Framework

The researchers states that driving metrics are highly predictive of fuel consumption

but with a considerable amount of variance attributable to route and vehicle type. There is

a substantial amount of literature on the effects of eco-driving behaviour, vehicle type,

and route features on fuel consumption and driving metrics (Brundell-Freij & Ericsson,

2005; Ma et al., 2015;Wang & Boggio-Marzet, 2018).

Vehicle simulations assess the sensitivity of fuel consumption to a wide range of

driving patterns. From these results, three aggressiveness factors were developed for

quantifying driving aggressiveness. Each aggressiveness factor, although based only on

the speed trace and vehicle characteristics, is proportional to fuel consumption in one of

three specific speed ranges: neighborhood, city, or highway speeds. These aggressiveness

factors provide a tool for comparing drive cycles and evaluating the real-world driving

patterns (Berry, I. 2010).

Scope and Delimitation

The research is about the impact of increase oil price on consumers in Sta. Maria,

Pangasinan. The researchers aimed to provide a better understanding of the different

impact of oil prices on consumers particularly in Sta. Maria.

The selected respondents are those who are experiencing the impact of increase in

oil price. The study focuses on consumers such as farmers, business owners, and

employees that are greatly affected by the oil price. The study was conducted on May 31,

2023 and was finished on June 04, 2023. The research was done in Sta. Maria,

Pangasinan.

Definition of Terms

This part of the study gives the readers an understanding of the concepts or factors

that is discussed throughout the study, as well as contextual information as to how the

researchers used those concepts in their study.

Oil Price - Oil price refers to the cost of a barrel of crude oil. It is one of the most

significant factors that affects the global economy. The price of oil can fluctuate due to a

variety of factors, including supply and demand, geopolitical events, and economic

conditions.

Impact - refers to the effect or influence that changes in oil prices have on various

aspects of the jobs and businesses of individuals or consumers.

Business - is one whose operations, profitability, or costs are directly impacted by

fluctuations in the price of oil.

Expenses - refers to the costs or expenditures that are influenced by changes in the

price of oil.

Increase - refers to a rise or upward movement in the cost of oil.

Consumers - refer to individuals, businesses, or entities that directly or indirectly

interact with and are impacted by changes in the price of oil.