The study measures the degree of responsiveness of consumer’s demand for petroleum products to changes in income and price. It notes that the demand for unleaded gasoline was not solely influenced by changes in price and income but dictated by the implementation of EO 446 which mandated the use of unleaded gasoline in lieu of leaded gasoline. The rest of the petroleum products, however, had positive relationship between price and demand considering that consumers still purchased these products despite price increases because of necessity. Moreover, a varying correlation between price (or income) and demand between years conveys that price is not the sole determinant in the purchase of petroleum products. It suggests that where there are negative reactions regarding price and demand relationships, a prospective tax policy on petroleum products should be calibrated to take care of these reactions.
