Oil Price Hike in Lipa City

Introduction:

Oil is one of the world’s most important source of energy since the mid-1950s. It is mainly in used in

supplying energy to power industries, heat homes, and to provide fuels for vehicles and airplanes to carry

both common goods and people to any part of the world. However, these past few years prices on fuel have

been increasing rapidly due to the effects of the tension between the two countries. According to JPMorgan

Chase & Co. and as cited by Business World, the rising of oil prices could potentially slow down growth in

Southeast Asia, including the Philippines.

The ongoing conflict between Russia and Ukraine is the primary cause of the oil price hike all over the

world. Russia is one of Europe’s biggest oil and gas suppliers, making drivers scratch their heads in anxiety

as oil companies have been giving hints about a looming price surge. This, however, is just the beginning, as

oil prices increase, so do other products and services, particularly energy and transportation that heavily

relies on oil. The prices of basic commodities have been starting to increase as of late since most, if not all,

of those products are transported by gas-powered vehicles from faraway farms to supermarkets. The effects

of oil price hikes at the macroeconomic level follow the household impact trends, and if these problems are

to continue, the economy will drop and result in currency depreciation. Some of its most significant

consequences are high inflation and economic slowdown. According to the Philippine Statistics Authority,

the share of oil as a non-renewable resource rent is 0.19% of the gross domestic product (GDP) for the last

20 years. In addition, oil is also one of the most significant contributors to manufacturing costs. While we, as

consumers, are still not shouldering these costs, producers cannot cushion them for long, as a result, these

will be passed down to the consumers, increasing the overall prices of goods and services, and causing

inflation. In the long run, sustained oil price hikes can slow down the growth of an economy. Like an

ordinary Filipino household, the Philippine economy, in general, is also up for a rough ride.

Bernar News

 Inflation rate went up to 6.1% in June, nearly double the figure from the same month last year.

 Transportation sector contributed heavily to the surging prices, 17.1% up from 14.6% in May.
 6.1% figure for June - up from 3.7% for the same month in 2021 - was within the central banks forecast

inflation rate between 5.7% and 6.5% (PSA).

 The average rate of inflation for the first 6 months of 2022 is 4.4%.

Inquirer.net

 Shell, Clean Fuel, Caltex, SeaOil will increase the pump price of Gasoline - P2.70 per liter and P6.55

per liter for Diesel.

 Kerosene is P5.45 per liter.

Statement of the Problem

1.) What are the reasons for the increase of price in oil in Lipa City?

2.) What are the effects of oil price hike to the citizens of Lipa?

3.) How do Lipeños cope up with the oil price hike?

4.) How oil prices affect the economy?

United Nation Sustainable Development Goals

Goal 7: Affordable and Clean Energy

From 83% in 2010 to 91% in 2020, the world's population will have electricity availability. Oil prices

have undoubtedly been under pressure due to both increased demand and worries about supply disruptions.

The increase in demand for oil has outpaced any advances in oil production and surplus capacity. As a

consumer, you might already be aware of the micro-economic impacts of rising oil costs. Most of us are

prone to think about the price of gasoline when we observe increasing oil prices since most households rely

on purchasing fuel. The amount of money that households spend on gas is expected to increase as gas prices

rise, leaving less money for other products and services. Over 700 million people globally live in darkness,

and 2.4 billion people still cook with harmful and polluting fuels. While energy security in the Philippines is
deteriorating as a result of the crisis in Ukraine, global energy costs are rising and the use of renewable

energy has grown, but the rate of growth is still too sluggish to reach Sustainable Development Goals. Some

cities seek to hasten the switch to renewable energy sources and increase investments in this sector in

response to the energy crisis, while others want to bring back coal, threatening the green transition.

Goal 11: Sustainable Cities and Communities

Aims to increase the longevity, security, and inclusiveness of cities and human settlements. Member

States are encouraged to enhance road safety, specifically by increasing public transit, and to ensure safe,

affordable, accessible, and sustainable transport systems for everyone. Special attention should be paid to

the requirements of individuals in vulnerable situations, such as those with disabilities. The plan also

supports ensuring that everyone has access to environmentally friendly areas that are accessible, inclusive,

and safe, including those who are disabled. By increasing public transit and making sure that everyone has

access to reliable, affordable, and sustainable transportation by 2030, we can increase road safety. Pay close

attention to the needs of vulnerable groups such as the elderly, women, children, and those who are disabled.

Formulated Real - Life Problem

From the start of 2021 up to October 4, Lipa City's oil prices increased drastically. ₱42.15 for diesel.

With an increase of 7.05% for diesel, what do you assume the prices of diesel will be in the near 2024?

Types of Function Used:

 Exponential Function

Mathematical Model
Solution

42.15(7.05)^n

42.15= cost of diesel

7.05= increase of diesel per year

n= number of years

42.15(7.05)^2

=2094.96

Final Answer:

The price of diesel in 2023 assuming that the growth will only increase is

Php 2094.96.

Recommendation

Consumers can use bicycles instead of vehicles that have expensive fuels and contribute to pollution.

The necessary use of diesel is a must and always observe ways to save diesel. Commute instead of using

private vehicles.

Conclusion

Oil price hike is a worldwide phenomenon. The effects of oil price hike significantly affects not just the

Europe, but also the Philippines and more specifically the area of Lipa City. Oil price hike causes difficulty

in transportation. It increases the minimum fares for commuters and increases the cost of fuel for drivers.

Moreover, household-related oil products also increase in price as the conflict between Russia and Ukraine

prolongs. As the prices of commodities soar, and the income of households remain unchanged, the

necessities and goods that an average Filipino family can buy will lessen. In turn, Filipino citizens finds

alternative ways to avoid the effect of oil price hikes; commuting instead of using private vehicles, saving,

and the wise usage of oil.

Your Role to Solve the Chosen Problem:

As students, we will fulfill our role by traveling via commuting or using bicycles to avoid the

consumption of expensive gas fuels. We will use only the necessary amount of oil products to avoid wasting
them. We will try our very best to let everybody know the causes, effects, and solutions, if not ways to

reduce its effects, on an oil price hike.