POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

OFFICE OF THE VICE PRESIDENT FOR BRANCHES AND SATELLITE CAMPUSES

STO. TOMAS BRANCH

“Ascension of Gasoline: The Oil Price hike”

Bayno, Ashley Yvanne L., Colis Johnbert T., Dacles, Janice B., Ramos, Daniel P.

I. BACKGROUND:

Crude oil, liquid petroleum that is found accumulated in various porous rock
formations in Earth’s crust and is extracted for burning as fuel or for processing into
chemical products. Crude oil is a mixture of comparatively volatile liquid hydrocarbons
(compounds composed mainly of hydrogen and carbon), though it also contains some
nitrogen, sulfur, and oxygen. Those elements form a large variety of complex molecular
structures, some of which cannot be readily identified.

Rising global oil prices are fast becoming a problem in the Philippines as they
continue to stoke inflation in an economy that is just starting to get its groove back after a
pandemic-led collapse. The Philippines is a net oil importer so any spikes in international
oil prices would push up pump prices at home. Adding upward pressure to fuel costs is a
weak peso, which could make imports more expensive. As an immediate solution to the
problem, the government will spend a fund to provide fuel subsidy to Public Utility Vehicles
drivers reeling from monitoring oil prices.

The Philippines, like many other countries, faces the challenge of dealing with
unpredictable and often turbulent changes in global oil prices. Oil is a crucial source of
energy for homes, industries, and transportation, and it plays a central role in stabilizing the
Philippine economy and supporting the daily lives of its people. When oil prices go up, it
means higher costs for things like gasoline and diesel in specific areas or countries.
Several factors contribute to these price increases, including changes in the worldwide oil
market, shifts in supply and demand, geopolitical events, and local policies.

In 2023, the Philippines experienced significant increases in oil prices, causing

concerns at both the individual and national levels. These price hikes have had negative
effects on society, affecting the overall cost of living, inflation rates, the state of the
economy, and transportation expenses.The increase in oil prices in the Philippines is
closely tied to global factors that affect the supply and demand for crude oil. These global
factors include tensions between countries, conflicts, natural disasters, and the economic
conditions in major oil-producing nations.

On the domestic front, the prices of oil products in the Philippines are heavily
influenced by local policies and taxes. Taxes like the value-added tax (VAT), the excise tax
on fuel, and other charges can significantly increase the final price of oil for consumers
(DOF, 2023). Recent changes in these tax laws and their impact on oil prices have led to
discussions and calls for a thorough review of these tax structures.

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
OFFICE OF THE VICE PRESIDENT FOR BRANCHES AND SATELLITE CAMPUSES
STO. TOMAS BRANCH

have been requests for a reevaluation of these tax structures due to the recent changes
in these tax laws and their effect on oil prices.

II. EFFECTS IN PHILIPPINE ECONOMY:

The ripple effect extends to production, transportation, and manufacturing expenses,

all of which soar with heightened oil prices. Consequently, this shrinks consumers'
disposable income, curbing their purchasing power for goods and services. In simpler terms,
the same income now covers far less, mirroring the predicament faced by many Filipino
families. Just five years ago, 1,000 pesos could sustain a family for three weeks, but today,
this amount is equivalent to a mere 100 pesos, lasting only three days, depending on one's
basic needs.

It also affects the higher cost of commodities when they establish oil prices tied with
other commodities in the market, the price hikes have a higher cost of living. All the daily
expenses needed by humans may also rise. (Gasoline, Prices of Food, Fares, Bills, etc).Oil
plays a pivotal role in driving up manufacturing costs. 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. While we, as consumers, are still not shouldering these
costs, producers cannot cushion them for long. And that will result in passing down to the
consumers, increasing the overall prices of goods and services, and causing inflation.

Given the interconnectedness of oil prices with other commodities in the market, such
price surges also translate into a higher cost of living. Beyond paying more for gasoline,
citizens are confronted with elevated prices for essential goods, transportation fares, and
daily expenses. Many commuters who use trains as their primary means of transportation
have noticed an increase in their daily costs as a result of the ongoing train fare increases
that began. The scenario gets worse due to increased oil prices. Because of the greater cost
of transportation, a larger portion of our daily expenses are now spent on it.

To summarize, the fluctuation of oil prices exerts a profound influence on the broader
Philippine economy. As oil prices rise, so does the inflation rate, a cause for concern among
Filipinos, who recognize their country's mounting debt and demand honest and dedicated
governance to navigate these turbulent economic waters. It leads the people of the
Philippines to think about their daily expenses and weekly budgeting. Public transportation
and Commuters has a great relation, making both parties affected from continuous change
and increase of oil prices.

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 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
OFFICE OF THE VICE PRESIDENT FOR BRANCHES AND SATELLITE CAMPUSES
STO. TOMAS BRANCH

REFERENCES:

The Editors of Encyclopaedia Britannica. (2023, September 29). Gasoline | Definition, Uses, &
Facts. Encyclopedia Britannica. https://www.britannica.com/technology/gasoline-fuel
Cigaral. (2021). Why are oil prices so high right now? Philstar Global. Retrieved October 11,
2023, from https://www.philstar.com/business/2021/11/05/2139196/why-are-oil-prices-so-high-
right-now
Gonzales, J. (2022). Oil price hike: What it means for the Philippine households and economy?
Camella Homes. https://www.camella.com.ph/oil-price-hike-what-it-means-for-the-philippine-
households-and-economy/
EIA (2023). "Geopolitical Tensions and Crude Oil Prices." U.S. Energy Information
Administration.
IEA (2023). "Global Economic Conditions and Oil Demand." International Energy Agency.
DOF (2023). "Department of Finance Statement on Excise Tax on Fuel." Department of Finance,
Republic of the Philippines.