The government of the Philippines has announced a 2.5 billion Peso (US$47m) relief fund to subsidise fuel costs for public utility vehicles, taxis, tricycles, ride-hailing apps and delivery services.
The fuel subsidies will provide welcome relief as drivers are facing significant increases in the cost of petrol and diesel.
Since the Russia-Ukraine conflict began on the 24th February, the price of crude oil jumped from around $90 a barrel to $124 in two weeks. Although prices have fallen again in the last week, the price is likely to remain volatile for some time as geo-political tensions around the world continue to simmer.
Q1. What is meant by the term subsidy?
Q2. Explain how a fuel subsidy is likely to help Filipino drivers.
Q3. Using demand and supply analysis, draw a diagram to depict the situation described in the article.
Q4. Explain why the price of oil has increased since the Russia-Ukraine conflict began.
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