Determining the relationship between the supply and price of petrol in Tanzania: A case study
Samuel Nyambega Nyang’au
The present study deals with the determination of the relationship between the supply and price of petrol in Tanzania, taking Gulf Africa Petroleum Corporation in Mwanza city as a case study. Over the years the supply of petrol has not been stable. It fluctuates from time to time prompting an automatic fluctuation of its prices and related products. Tanzania alone has witnessed and continue to witness occasional changes in the price of petrol being orchestrated by petrol supply changes. The present paper was guided by the following objectives: To find the response of price to the changes in the supply of petrol and the influence of petrol price on other economic variables. The study used secondary data whereby time series was employed to get data from the year 2000 to 2011. The study employed simple Ordinary Least Square regression model whereby data was analysed using STATA 9.1. The results showed that a slight change in the supply of petrol leads to a change in its price. Changes in the supply of petrol hence its price will automatically lead to changes in the price of other economic variables dependent on petrol. As a recommendation, the study calls for government intervention so as to keep the price of petrol on check. Other sources of energy such as natural compressed gas (NCG) should be sought as an alternative to petrol.