Chapter I

INTRODUCTION

This section of the research paper deals with the study's history, problem
statement, importance, and scope and delimitation.

Background of the Study

Oil is a non-polar chemical substance that is viscous liquid at ambient

temperature and is both hydrophilic and lyophobic. It is a crucial substance that is
used in everyday activities for fueling machineries. It is used by a vehicle to operate
and the machineries that are used for business transportation.

As time passes, changes in crude oil prices are the global phenomena, in
particular, influential in determining the economies that are not financially stable and
are fragile to the influences of external stocks. Price hike is the percent of increase in
the cost of the goods and services. As fuel prices continue spiraling upward, the
added costs are a significant concern for transportation.

For millions of Filipinos, tricycles are not only a mode of transportation but
also a source of income. They have vague access to formal financial services and
rely on a small scale daily income from a community based company to make ends
meet. This had been the primary source of revenue for tricycle drivers and their
families. The tricycle drivers, however are one of the most affected industries in our
country.

Furthermore, since the price of gasoline in the Philippines is rising and we

know that gasoline is mostly utilized as an engine fuel in tricycle driver’s vehicles, it
becomes strenuous for them. A number of individuals in relation to transportation
services have ensued on unemployment due to the dramatic increase of oil prices.
Lamenting that this year has been the hardest for them and for their family. The
increase in oil price is expected to have adverse effects to the daily income of the
drivers.

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 Oil prices are generally thought to increase and reduce economic growth. The
main challenge of today’s transport costs is oil price. Freight movement in most
modes remains largely dependent on expensive and finite fossil fuels, predominantly
diesel fuel.

The foremost single factor affecting the retail price of diesel fuel is the price of
crude oil. Crude oil as an energy source is a vital component that determines the
condition of an economy, its price fluctuation impact on all industrial sectors whether
directly or directly, be it in banking, energy, retailing or transportation industries.

The impact of oil prices on transport sector depends upon three issues, which
are; the relevance of the oil price on the cost of the energy used for each transport
mode, to what extent oil price is transferred to transport fuel prices, and the relative
weight of the energy cost on total operating costs for each mode. Fuel prices are a
cost to transportations industries and a direct cost to consumer.

Since we have established that Oil prices are tied to other commodities in the
market, price hikes also mean a higher cost of living. Aside from paying more for the
same amount of gasoline, prices of food, fares and other daily expenses may also
rise. According to the Philippine Statistics Authority, the share of oil as a renewable
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 fact, Bloomberg predicts that a ‘10% rise in oil prices could add a 0.4%
percentage points’ to Philippine inflation. To add, Bangko Sentral ng Pilipinas (BSP)
governor Benjamin Diokno also sees the high oil prices to drive inflation as high as
5.5% to 6%. This is above BSP’s expected rate which is between 2% to 4%. The
transportation sector in Malaysia, like in other nations, is the biggest consumer of
petroleum products, so the shock will have a noticeably much more significant
impact on this sector, according to Solaymani and Kari (2013). High Oil prices will
have an adverse effect on the transportation industry by raising current
transportation costs, changing chained distribution systems and reducing the market-
serving capacity of current logistical systems.

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 The potential contribution or insights of the research is to the pursuit of
knowledge and discovery, which has always been an intrinsic human characteristic,
but when new knowledge is curated and put in the right hands, it has the power to
bring about high-value change in the society. Most contributions are knowledge-
increasing. They present new findings, expand the research to new areas, make
existing theories and methods more detailed, accurate or appropriate for some
context, efforts to improve the implementation of effective practice and to speed up
improvements in quality and patient safety, that continue to pose challenges for
researchers and policymakers. Organizational research and in particular case
studies of quality improvement offer methods to improve understanding of the role of
organizational and microsystem contexts for improving care and the development of
theories that might guide improvement strategies.

The study of the correlational relationship between the oil price hike to the
daily consumptions of the families of tricycle drivers is beneficial and applicable to
case studies in relation to investigations such as this. Existing evidences conducted
by the researchers in the study may be utilized by academic establishments as an
example, basis and/or a source of a discrete investigatory information of a
correlational research design, to evaluate, analyze and assess probabilities of their
applied study. An educational implication for the school, students and further
researchers of interest.

This study helps the Dulag tricycle drivers to be aware of this issue for them to
take an action for this matter. This will give insights to the passengers to understand
and consider the difficulties encountered by the tricycle drivers. The public will know
the impact of the oil price hike to the daily consumption of the families of Dulag
tricycle drivers.

The purpose of this research study is to determine the effect of oil price hikes
towards the daily income of Dulag tricycle drivers. Furthermore, the researchers
identify the contributing factors that results on the affection of the daily income of
tricycle drivers residing in Dulag, Leyte.

Statement of the Problem

General Question:

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 What are the effects of the oil price hike on the daily income of Dulag tricycle
drivers?

Specific Questions:

1. To what extent does oil price hike affects the daily income of Dulag tricycle drivers
in terms of their:

a. Budget for gasoline throughout the working day

b. Family needs

2. Is there a relationship between oil price hike and daily consumption of the families
of Dulag tricycle drivers?

a. Budget for gasoline throughout the working day

b. Family needs

3. Is there a significant difference between the daily consumption of tricycle drivers

before and after the oil price hike?

Significance of the Study

By conducting the procedures presented by this research, there will be an

expansion on the current understanding on the affection of oil price hiking with
regards to the daily income of transportation oriented services.

Drivers. This study provides a clear presentation on these tricycle drivers and
their experiences, factual and realistic evidences that support the pretention of the
study’s independent and dependent variable, in which case is directly proportional.
Giving them insights on the influence of monetary repercussion on account of
external factors, events and scenarios which can be appropriate and useful for them,
to the society and the entrepreneurship industry.

Oil Companies. This research will benefit a variety of business driven oil
companies and individuals operating through transportation services in deciding
which marketing strategy should they employ and what strategy should they apply.
Long-term price hikes can potentially be the result of this research to review their
current setting and determine contributing factors.

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 Furthermore, a detailed presentation on the investigation of the independent
and dependent variable in this research may serve as a tool for further studies to
innovate the current strategies being affected on the small to large scale conflict with
reference to price hikes.

Scope and Delimitation

This study focuses on the tricycle drivers in the Dulag municipality's Andoks
district who are impacted by the oil price increase, in which are the subjects of the
data collection. However, the contingent tricycle drivers in the other areas of Dulag
are not included in the study. Data will be gathered using a survey in which
participants respond to a questionnaire. The survey is conducted individually with
fifty (50) participants. However, a driver of a tricycle who does not have a license or
by no means licensed is categorically excluded.

This study looked into how the increase in oil prices affected the daily wages
of Dulag tricycle drivers. This research delimits only to the tricycle drivers in Dulag,
Leyte. The goal of this study is to determine how the increase in oil prices has
affected the daily wages of Dulag tricycle drivers. The study does not, however, take
into account how the increase in oil prices may have affected Dulag tricycle drivers'
behavior. This investigation must be finished within a month of the first day of
operation.

Definition of Terms

In order to provide clarity and to establish view of understanding, the terms

below is operationally defined.

Gasoline. A fuel made from crude oil and other petroleum liquids. Gasoline is mainly
used as an engine fuel in vehicles.

Inflation. The gradual loss of purchasing power, reflected in a broad rise in prices for
goods and services.

Price hike. Percent of increase in the cost of goods or services

Survey. The process of investigating a procedure or interviewing a chosen sample

of people to learn more about a service, product, or process. Surveys used to gather
data ask a specific set of people about their beliefs, actions, or knowledge.

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Tricycle drivers. Typically belong to low income and the micro-small and medium
sized enterprises (MSMEs) sector as self- employed workers. They have a little
access to formal financial services and sustain with small daily earnings from a
community based transportation business.

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 Chapter II

REVIEW OF LITERATURE

Globalization according to UKOG (United Kingod Oil and Gas) energy for
Britain, is dependent on oil for the transportation of various products and services,
whether local or international. As a result, an increase in oil prices can have an
impact on each country’s economy and, more importantly, the household income of
middle- and lower-class workers (Kpodar, Djiofack, 2010).

Political instability can also have an impact on the oil price (El-Katiri, Fattouh,
and Mallinson, 2014). It was demonstrated when Russia and Ukraine went to war.
Because of other countries’ sanctions against Russia and suppliers taking advantage
of the situation, the oil that the Philippines was buying from Russia, our main supplier
of oil over the years, increased in price, causing sudden inflation (Pundanera, 2022).
The oil price and sudden inflation have a significant impact on the middle and lower
sectors, particularly transportation workers.

Transportation sectors are always the ones most affected when oil prices rise,
according to Saeed Solaymani and Fatimah Kare’s (2013) study, because they
consume the most petroleum products. Furthermore, petroleum products are one of
the most basic requirements of a developing country, which also applies to the
Philippines, which is known to be a developing country.

In just a short period of time, oil changed the world, as C.J. Campbell
discovered in 2002. In addition to being the most effective source of energy for
machines and vehicles, oil is also the most affordable. People and governments in
many oil-rich nations started to rely on oil production for their economy because it
could bring in substantial sums of money that they could utilize for modernization.
One of the key reasons why trade and the transportation sector integrated so much
more easily was the oil. Additionally, it aids industrialization in increasing the number
of wage earners, consumers and tax payers, all of which are beneficial to the
economy. The oil that enabled us to advance into a modern society after enduring
World Wars 1 and 2 is in short, supply in the 21 st century, which increases oil prices
compared to previous decades.

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 There are a variety of factors that can influence the price of oil. According to
Kimberly Amadeo (2022), the three variables that influence the price of oil are
current supply, future supply, and demand. The price of oil may change if there is a
large supply on hand but little demand. The amount of oil a country has in reserve
will determine future supply, and reserves can help control a country’s rising oil
prices.

In the article, Kimberly Amadeo (2022) added that political unrest and natural
calamities are partly to blame for the rise in oil costs. The pandemic (COVID-19) was
a calamity that many oil-producing nations weren’t prepared for, and oil consumption
dropped as a result. However, early in 2022, the invasion of Ukrain by Russia
caused the price of oil to soar. When the US decided not to buy oil from from Russia,
the price continued to rise up to $ 100 per barrel and even reached $ 130 per barrel.
Russia is the largest oil exporter in the world, and as a result of the sanctions that
other nations applied, the price of oil globally was impacted.

Inflation rises in parallel with the rise in oil prices. It was established by
Michael La Blanc and Menzie D. Chinn (2004), who examined the IMF report from
three nations- the US, Japan and the Euro Area in December 2000. According to the
analysis, the CPI inflation would rise by 0.8% in the US, 0.3 in Japan, and 0.7% in
the Eurozone if the price of a barrel of oil rose by 16%. Because oil is utilized in the
manufacture and transportation of a wide variety of goods and services, consumers
will thus see an increase in the prices of the goods and services they use if the price
of crude oil rises.

Researchers Yi-Ming Wei, Jian-Ling Jiao, Qiao-Mei Liang, Ying Fan, and
Jian-Ling Jiao examined how the price of crude oil affected the Chinese economy in
2007. They learned that foreign crude oil is expensive and that the transportation
industry will be most negatively impacted by a 100% increase in crude oil prices.

(2010) Kangni Kpodar and Calvin Djofack investigate how rising oil process
affect Mali household’s income. While higher kerosene and gasoline prices
disproportionally harm the poorest households, higher diesel prices disproportionally
affect wealthier households. Due to the rise in the cost of gasoline, diesel and
kerosene, each household daily income has been reduced. The suffering of the poor
household is greater, which also raises the poverty rate.

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 This “review of literature” largely focuses on how everyone is impacted by the
increase in oil price prices, particularly the transportation sector. Additionally, it
analyzes how increasing oil prices lead to global poverty. We also wish to discuss
the significance of oil for modernization and economic expansion.

Conceptual Framework

1. Increased fuel expenses

2. Fare adjustments
3. Reduced demands
4. Competition

IV DV

Daily Income of Dulag

Oil Price Hike
Tricycle Drivers

Number of
passengers daily

Figure 1. The schematic diagram of the Independent and Dependent Variables of

the Study

The study’s independent and dependent variables are displayed in this

conceptual framework. The daily income of the Dulag tricycle drivers is expected to
be significantly impacted by the oil price as it continues to rise. The diagram also
includes a moderating variable that may have an impact on how the independent
and dependent variables relate to one another. The number of passengers a day is
also reported to have an impact on the Dulag tricycle driver’s income.

The proposed conceptual framework for this study draws on existing theories
on consumer behavior and decision-making, income and consumption, and the

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impact of external factors on households. Specifically, the framework incorporates
the following concepts:

Income and Consumption: This refers to the relationship between income and
household consumption behavior. The theory suggests that when income increases,
consumption also increases, and vice versa.

Consumer Behavior: This refers to the decision-making process that

consumers go through when making purchases. It includes factors such as price,
quality, availability, and preferences.

External Factors: This refers to factors outside the household that may affect
consumption behavior. In this study, the external factor is the oil price hike.

The proposed conceptual framework suggests that the oil price hike will have
a significant impact on the consumption behavior of households in Dulag, Leyte.
Specifically, it is hypothesized that the oil price hike will lead to a decrease in
household consumption, especially for low-income households such as those of
tricycle drivers.

Overall, this study aims to contribute to the existing literature on the impact of
external factors on household consumption behavior and to provide insights that can
inform policy decisions related to mitigating the negative effects of oil price hikes on
vulnerable households.

Hypothesis

Null Hypothesis

The increase in oil prices has no direct effect on the daily income of Dulag tricycle
drivers.

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 Chapter III

METHODOLOGY

The researchers used a Correlational research design in which they

determine if the variable increases or decreases as another variable increases or
decreases. Establishing and investigating relationships between two variables (or
more) without the researcher controlling or manipulating any of them, predicting the
attitude of the association. This study aims to identify the relationship of the oil price
hike to the daily income of tricycle drivers of Dulag.

Research Sampling

The research used is simple random sampling in which the researcher

randomly selects a subset of participants from a population, in this case, tricycle
drivers of Dulag. Each individual sample of the population has an equal chance of
being selected. Data is then collected from as large a percentage as possible of this
random subject. Ensures that results obtained from the sample should approximate
what would have been obtained if the entire population had been measured.

In this research we have gathered data through simple random sampling in

which researcher choose to make generalizations about population. A major
disadvantage is sampling from a large population, which is costly and time-
consuming. Instead, one can go for other sample methods in data that are highly
credible.

Research Instrument

This study used a survey questionnaire with simple random sampling as an

instrument for gathering the data. A questionnaire is a list of written questions to get
a specific information on a particular topic. The survey is conducted to test the
relationship between the oil price hike and Dulag tricycle drivers. The questionnaire
is divided into three sections (A, B and C). Section A consists of questions related to
the personal information of the respondents in Dulag. Section B consists of three
questions that obtain information about how the oil price hike affects the Dulag
tricycle drivers: strongly agree (1), agree (2), disagree (3), and strongly disagree (4).
Section C consists of four questions that will bring out the relationship between the
oil price hike and the income of Dulag tricycle drivers.

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 A questionnaire is far more practical and affordable, although it does have
some disadvantages. It is impossible to tell whether the respondent is answering the
questionnaire honestly or whether they comprehend the questions. It would also fail
to capture the respondent’s emotions and feelings. Which is why the researchers
guide and assist the respondents by their vernacular, which can be useful in
analyzing the data gathered.

Data Gathering and Procedure

The researchers prepared the consent letter to the respective authority before
conducting the study. For the quantitative data collection, the researchers have
created questionnaires and gathered the data through a survey. The survey was
conducted face-to-face, and the survey was facilitated and assisted by the
researchers and assisted by their research adviser.

The researcher will set requirements to determine if the participants are

eligible. If the tricycle drivers have three to five years of experience, he will have
considered a participant. He has the right to disagree nor the right to not write his
name. Most importantly, all his written data will be confidential and used only for this
study’s data collection.

Data Analysis

The researchers analyzed the data using statistical tool; mean. This study
used mean and t-test as statistical tool to determine the effects of Oil price hike to
the daily income of Dulag tricycle drivers in terms of the budget for gasoline
throughout the working day and the family needs and also to analyzed the gathered
data to determine if there is a relationship between Oil price hike and the daily
consumption of the families of Dulag tricycle drivers.

To test the hypothesis, the researchers conduct a two-sampled t-test to

compare the means of the two groups. The results could help us understand the
effect of oil price hike to the daily consumption of the families of tricycle drivers in
Dulag, Leyte. The increase in the price of oil has an effect on the daily income of
Dulag tricycle drivers, as proven and confirmed by the data collected using a
questionnaire.

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Table 1. Research Questions and Data Treatment

Research Questions Data Treatment

1. To what extent does Oil price hike

affects the daily income of Dulag tricycle
drivers in terms of their:
Mean
a. Budget for gasoline throughout the
working day.

b. Family needs

2. Is there a relationship between oil

price hike and daily consumption of the
Mean
families of Dulag tricycle drivers?

a. Budget for gasoline throughout the

working day

b. Family needs

3. Is there a significant difference

between the daily consumption of tricycle
T-Test
drivers before and after the oil price
hike?

Table 1. Shows the research questions and the data treatment. For the first
question, the researchers used mean for the data treatment to get the effects of Oil
price hike in terms of budget for gasoline and Family needs. In the second question,
the researchers also used mean to determine if there is a relationship between oil
price hike and daily consumption of the families of Dulag tricycle drivers in terms of
budget for gasoline and Family needs. And in the third question, the researchers
used t-test to find out if there is a significant difference between the daily
consumption of tricycle drivers before and after the oil price hike.

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