Determination of Financial Factors Affecting Fuel Price Fluctuation in Tanzania: The Case of Dar Es Salaam Region.

Kisyeri, Alexander Francis (2024) Determination of Financial Factors Affecting Fuel Price Fluctuation in Tanzania: The Case of Dar Es Salaam Region. Masters thesis, The Open University of Tanzania.

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Abstract

The research investigated the determinants of fuel price fluctuations in Tanzania, focusing specifically on financial factors, while acknowledging that non-financial factors such as geographical location, availability of crude oil resources, national strategies for security of supply, and the overall economic and political stability of the country. The study examined the relationship between fuel prices and various independent variables, including import costs, government taxes, and overhead margins. Time series data were collected, and robust multiple linear regression analysis was employed following descriptive statistics. Prior to this, inferential diagnostic tests such as normality, heteroskedasticity and multicollinearity were conducted to assess the characteristics and suitability of the data for analysis. The findings revealed a significant positive relationship between fuel price and import cost, operational costs and government taxes. The free-on-board (FOB) price and the Premium both hold the highest impact and emerged as the key drivers while variables like Fuel Levy, Petroleum Fee, Overheads & Margins, Charges payable to Agencies and Demurrage Cost signify a one-to-one relationship with fuel prices. These findings underscore the importance of policy interventions aimed at managing import costs adjusting government taxes such as fuel levies and controlling the operational costs to stabilize fuel prices effectively. To improve the management of fuel price dynamics, the study recommends stabilizing the FOB cost structure through policies that address international volatility and fostering international partnerships for better pricing. Also, advises implementing strict oversight on premium costs and introducing a flexible tax system that is regularly reviewed. Keywords: Price Fluctuations, Importation Costs, Operational Costs, Government Taxes.

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