I.

Background of the study

This paper is about the relationship between the price of oil and the number of
vehicles sold. The independent variable in the study is the price of oil. On the other
hand the dependent variable is the number of vehicles sold. I chose this topic to
study because in our world today, vehicles are becoming more and more of a need
and the price of oil keeps on fluctuating. It would be distinctly important and
interesting to find out if a change in the price of oil would result to a considerable
change in the number of vehicles sold.

Oil, without a doubt, is an extremely important resource not only in the Philippine
economy but also in the world economy. It keeps most, if not all, of the
infrastructures of a country running. Unfortunately, oil is only rich in certain parts of
the world. Furthermore, a fuel derivative of oil the gasoline, is also a vital resource
in the country. Vehicles, used for transportation and business, depend heavily on
this gasoline. Thus, a change in the price of oil could certainly cause a change in the
price of gasoline thereby also causing a change in the sales of vehicles.

II. Objectives of the study

There are two objectives for this study. First is to be able to answer the
questions, Is the relationship between the change in the price of oil and the number
of vehicles sold positive or negative? and How greatly would the change in the
price of oil affect the number of vehicles sold?. The second objective is to be able to
predict future sales of vehicles using the results of the regression analysis. After
getting the results of the regression analysis, I can finally analyze the results and
figure out how strong the relationship between the two variables I have chosen.
Then, I can use the data I have gathered after the results to predict the future
number of vehicles sold whether it increases or decreases.

III. Background of the statistical tool to use

The statistical tool used in this study is regression analysis. Regression analysis
is a statistical tool for the investigation of relationships between variables. It includes
many techniques for modeling and analyzing several variables, when the focus us
on the relationship between a dependent variable and one or more independent
variables. Generally, the person using regression analysis seeks to find out the
causal effect of one variable upon the other the effect of a price increase upon
demand, for example. For this study however, it seeks to find out the effects of the
change in the price of oil upon the number of vehicles sold. To explore such issues,
one must assemble data on the underlying variables of interest and uses regression
to estimate the quantitative effect of the causal variables upon the variable that they
influence.