Effects of Oil Price Hike to Drivers and Commuters

SENIOR HIGH SCHOOL IN MALVAR

San Joaquin Road, Poblacion, Malvar, Batangas
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 CHAPTER 1

THE PROJECT AND ITS BACKGROUND

Introduction

Rising fuel prices, the last few years have led to significant increases in costs for public

transit agencies. As fuel prices continue spiraling upward, the added costs are a significant

concern for transportation officials. A possible benefit from higher gas prices, though, is an

increase in public transit ridership. As the cost of fueling a car increases, people may seek out

ways to reduce fuel consumption, and one such option is public transit. If an increase in gas

prices leads to a rise in transit ridership, then fare revenue would increase, and the added fuel

costs for the transit operator would at least be partly offset. A number of news reports across

the United States have indicated that transit ridership has increased with the rise in gas prices,

but few studies have been conducted to confirm this relationship or measure the extent of it. If

there is any effect on ridership, it would be interesting to see if the impact is a short- or long-run

phenomenon. That is, a sudden large price increase may lead to a jump in transit ridership, but

will this level of use be sustained? Will riders permanently change their driving habits, or will

they eventually accept the higher gas prices and return to their old routines? To adapt to the

higher gas prices, they may buy more fuel efficient vehicles or move closer to work. On the

other hand, people could start using transit after a spike in gas prices, and their habits could

change permanently such that they continue using transit even if gas prices drop. It is also

possible that gas prices may not affect ridership in the same way for all transit agencies.

Someone who travels longer distances will likely be more sensitive to changes in gas prices.

SENIOR HIGH SCHOOL IN MALVAR

San Joaquin Road, Poblacion, Malvar, Batangas
www.shsinmalvar.ml
The objective of this study is to estimate the effect of gas prices on bus ridership for small urban

and rural transit agencies. Secondary objectives are to examine the longer-run implications and

to determine if there are different effects for different types of transit operations. The results of

this study are important because they provide some insight about the ability of transit agencies

to survive under rising fuel costs. A significant increase in fare revenue resulting from increased

ridership would allow transit agencies to continue operating without making substantial changes,

but if fare revenues do not increase sufficiently, then transit agencies may need to investigate

an increase in fares or a decrease in service, or they may need to seek additional public

funding.

Statement of the Problem

Transportation is one of the most important in our economy. As month pass by, gasoline

is getting more expensive and it have effects for those drivers and commuters, so the

researcher wants to know the effects of oil price hike to drivers and commuters. This research is

a type of qualitative research that focuses on the effects of oil price hike to drivers and

commuters. The objective of the study was to determine the impact of oil price hike to the

economy. Also to known the different perception of the drivers and commuters on that particular

issue. The respondents of this study are the commuters and drivers in Malvar Batangas

1.What are the effects of oil price hike to the daily income of the drivers and commuters?

2.What way drivers balance their budget for refueling?

3.What adjustment that they do just to divide their needs over gasoline refilling

4. What way that commuters adjust their budget when they are commuting

SENIOR HIGH SCHOOL IN MALVAR

San Joaquin Road, Poblacion, Malvar, Batangas
www.shsinmalvar.ml
Scope and Delimitation

This research was design to know the Effects of Oil Price Hike to the Drivers and

Commuters to seek suggestion from the respondent. To achieve its purpose, the researchers

conducted a interview on PBBSS TODA drivers of Malvar Batangas

The study was cover 10 tricycle drivers and 10 commuters. The researcher believe that

the PBBSS TODA drivers will be the perfect respondents for this study

Significance of the Study

To the commuters- this study aims to help the commuters to know how to balance their budget

for traveling fee

To the drivers- this study aims to help the drivers to determine what is the highly effect of oil

price hike

To the future researcher- this study will be a future basis for the next researcher

SENIOR HIGH SCHOOL IN MALVAR

San Joaquin Road, Poblacion, Malvar, Batangas
www.shsinmalvar.ml
 CHAPTER II

Review of Related Literature

This chapter presents the related literature and studies reviewed by the researchers to

gain necessary information on the present study. This information served as the guide which

directed the researchers in the conduct of the present undertaking.

Conceptual Literature

According to Glosbe- considering the continued subbed food price and the absence of

further planned energy price hikes this year consumer price inflation

According toPetropedia-Oil Price refers to the spot price of one barrel of the

benchmark crude oil. The price depends upon its grade, location and the content of sulfur

present in it. The price of oil can be determined with the help of balance between its demand

and supply. Oil storage trade is a strategy in which oil is purchased by the large oil companies

when the prices are low for instant storage and delivery. These large oil companies then keep

the oil stored till the prices rise.

According to 20$ per Gallon by Christopher Steiner-We use to turn to the weather

when all else failed us as conversationalist. Clouds and sun, however, have been relegated to

the backseat of chitchat lulls. Everyone wants to talk about the price of gasoline. Even if you

don’t drive this is fascinating fodder. Yes the calamitous increases and the more sudden

decreases of gasoline price have been interesting to us purely as an economic curiosity how

can something that’s been around for so many years, in such utter abundance, suddenly see its

value rise and fall with such confounding volatility? but there’s more to our interest than cerebral

economics.
SENIOR HIGH SCHOOL IN MALVAR
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 According to Effects of Gasoline prices on Driving Behavior and Vehicle Markets

by David Austin – over the past several years, gasoline prices have risen well above their

historic average. In many parts of united states, gasoline prices where above 3 dollar per dollar

for much of 2007. Although consumers in the past did not respond very much to small

fluctuation in the price of gasoline, the recent large increases have led many people to make

adjustment for example, in the way they drive and in the kinds of vehicles they buy.

This congressional budget office (CBO) Study-prepared at the request of the ranking

member of the senate budget committee--------relates rising gasoline rises to changes in how

fast people drive, the volume of highway traffic, and rail transit ridership. It also examines the

effects of market shares, fuel economy, the pricing of cars and light trucks purchase over the

past several years with the worldwide price of oil continuing to rise.

Research literature

Evans and Fisher (2011)foud no evidence of oil price pass-through effect on core

inflation (inflation exclude food and energy prices) since mid1980s (sample period: 1982 to

2008)

Hooker (2002) studied the relationship between oil prices and inflation on the sample

year 1962 – 1980 and 1981 – 2000. The results showed that oil price had significance impact on

inflation in the first sample period but not in the later sample period.

Hanly and Dargay (1999), and Goodwin (1992) provided a review of these studies. An

increase in fares, naturally, has a negative impact on ridership, but the response is generally

found to be somewhat inelastic. Elasticity estimates have ranged between -0.2 to -1.0.1

SENIOR HIGH SCHOOL IN MALVAR

San Joaquin Road, Poblacion, Malvar, Batangas
www.shsinmalvar.ml
 Litman (2004) cited a study by TRACE (1999) which estimated that a 10% rise in fuel

prices increased transit ridership by 1.6% in the short-run and 1.2% over the long-run.

Doi and Allen (1986) also remarked that elasticity estimates should differ from city to

city and from system to system reflecting their own idiosyncratic backgrounds

Lamazoshvili (2014), the effects of oil price shocks can be viewed from three factors,

i.e. the source of shocks, the transmission mechanism of oil shocks and the structure of energy

flows. Some studies distinguish the effect of oil shocks between oil supply and oil demand

shocks.

(Borenstein, 2017). A common concern is that pricing policies will disproportionately

affect a subset of households, such as less-wealthy households outside of urban areas

Ibrahim (2015) investigated the relationship between food and oil prices for Malaysia

using a nonlinear ARDL model. The study detected long run relationship on the oil price

increases and food price

Lamazoshvili (2014), the effects of oil price shocks can be viewed from three factors,

i.e. the source of shocks, the transmission mechanism of oil shocks and the structure of energy

flows

e.g.Dahl (1996); Dahl and Strener (1991);Drollas(1984);Espey (1997);Sterner

(1990)one particular objects of these studies has been to understand how the prices of gasoline

influences ridership on public transportation focusing on shorter time horizons in which it is not

feasible for people to alter their commitment to fuel consumption or to buy more fuel-efficient

cars

SENIOR HIGH SCHOOL IN MALVAR

San Joaquin Road, Poblacion, Malvar, Batangas
www.shsinmalvar.ml
 Donna (2010), Wang and Chen (2014), and Goldberg (1998) investigated how, in the

short run, drivers alter how much they drive when gasoline price increase gasoline prices in

medium run

Von Below and Vézina (2016) also studies the effect of oil prices on trade. This

research is a natural continuation of their paper. The major additional contributions made here

are: the theory and evidence for how oil prices affect shipping costs, and therefore, trade on a

global scale, more general form for the oil price and distance interaction term, and lastly. a

robustness check using different data sources and specifications.

Synthesis

The study of Lamazoshvili (2014), the effects of oil price shocks can be viewed

from three factors, i.e. the source of shocks, the transmission mechanism of oil shocks and the

structure of energy flows. Some studies distinguish the effect of oil shocks between oil supply

and oil demand shocks was related to the present study Effects of oil price hike to the drivers

and commuters.

SENIOR HIGH SCHOOL IN MALVAR

San Joaquin Road, Poblacion, Malvar, Batangas
www.shsinmalvar.ml
Conceptual framework

To further understand how the study has been regarded, the researcher used the Input

Process-Output box {IPO} to show the method of this study

Input Process Output

 Effects of Oil  Questionnaire  To understand

Price Hike to  Interview effects of oil price

Drivers and  Tabulation hike to the daily

Commuters income of the

 Way of drivers to drivers and

balance their commuters

budget for  Recommend

refueling solution for the

 adjustment that problem between

they do just to the oil price and to

divided their the daily income of

needs over the driver.

gasoline refilling

SENIOR HIGH SCHOOL IN MALVAR

San Joaquin Road, Poblacion, Malvar, Batangas
www.shsinmalvar.ml
Research Paradigm

The input box contains the statement of the problem of the research include: Effects of

Oil Price Hike toDrivers and Commuters, Way of drivers to balance their budget for refueling,

adjustment that they do just to divided their needs over gasoline refilling. The process box

includes the self- constructed questionnaire used to gather the needed data, interview,

tabulation. The input box included: To understand effects of oil price hike to the daily income of

the drivers and commuters, Recommend solution for the problem between the oil price and to

the daily income of the driver.

Definition of terms

The following terms are defined conceptually and operationally to give the readers a

clearer understanding of this study.

Economy- An economy (from Greek οίκος – "household" and νέμoμαι – "manage") is an area

of the production, distribution and trade, as well as consumption of goods.

Oil price hike- The price of oil, or the oil price, generally refers to the spot price of a barrel of

benchmark crude oil—a reference price for buyers and sellers.

Transit agencies- or transit authority is a government agency or a public-benefit

corporation created for the purpose of providing public transportation within a specific region.

A transit district may operate bus, rail or other types of transport including ferry service, or may

operate other facilities. In some cases, the transit district may be part of a larger organization

such as a state Department of Transportation.

Transportation- is the movement of humans, animals and goods from one location to another.

In other words,

SENIOR HIGH SCHOOL IN MALVAR

San Joaquin Road, Poblacion, Malvar, Batangas
www.shsinmalvar.ml