<p>This study examines the determinants of total and specific petroleum product import demand in Tanzania, employing a time series forecasting approach. The analysis focuses on total oil imports and particular components of refined petroleum products imported in Tanzania via the Bulk Procurement System. These products include gasoline and/or diesel, kerosene, and jet oil, which have been largely overlooked in the literature. Using the ARDL bound test and the Error Correction Model, this study examines the short- and long-term factors influencing Tanzania's imports of petroleum products overall and of specific products between 1990 and 2021. The results show that Tanzania's demand for petroleum product imports is influenced by exchange rates, global oil prices, economic growth, and demographic changes. Brent spot prices and currency exchange rates are important long-term determinants of total petroleum product imports, while the exchange rate depicted a large positive influence, indicating that local currency depreciation increases import costs. The inelastic demand for petroleum goods, even in the face of price hikes, highlights Tanzania's reliance on imported oil for economic activity. As the economy expands, kerosene's negative income elasticity of demand points to a move toward more cost-effective energy sources. In contrast to bound test analysis, which reveals no evidence of cointegration in some models, the results of a structural breaks analysis, which was explicitly carried out in the estimation models to increase the robustness of the time series analysis, demonstrate a consistent long-term relationship between variables in the jet oil model. This signifies the importance of taking structural breaks into account when analyzing time series. The study recommends maintaining a stable exchange rate, diversifying energy sources, establishing strategic petroleum reserves, and improving import efficiency to manage import expenses and reduce vulnerability to exchange rate volatility.</p>

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Determinants of petroleum product import demand in Tanzania: a time series analysis using ARDL and ECM approaches

  • Husna Sizza,
  • Anthony Nyangarika,
  • Thomas Kivevele

摘要

This study examines the determinants of total and specific petroleum product import demand in Tanzania, employing a time series forecasting approach. The analysis focuses on total oil imports and particular components of refined petroleum products imported in Tanzania via the Bulk Procurement System. These products include gasoline and/or diesel, kerosene, and jet oil, which have been largely overlooked in the literature. Using the ARDL bound test and the Error Correction Model, this study examines the short- and long-term factors influencing Tanzania's imports of petroleum products overall and of specific products between 1990 and 2021. The results show that Tanzania's demand for petroleum product imports is influenced by exchange rates, global oil prices, economic growth, and demographic changes. Brent spot prices and currency exchange rates are important long-term determinants of total petroleum product imports, while the exchange rate depicted a large positive influence, indicating that local currency depreciation increases import costs. The inelastic demand for petroleum goods, even in the face of price hikes, highlights Tanzania's reliance on imported oil for economic activity. As the economy expands, kerosene's negative income elasticity of demand points to a move toward more cost-effective energy sources. In contrast to bound test analysis, which reveals no evidence of cointegration in some models, the results of a structural breaks analysis, which was explicitly carried out in the estimation models to increase the robustness of the time series analysis, demonstrate a consistent long-term relationship between variables in the jet oil model. This signifies the importance of taking structural breaks into account when analyzing time series. The study recommends maintaining a stable exchange rate, diversifying energy sources, establishing strategic petroleum reserves, and improving import efficiency to manage import expenses and reduce vulnerability to exchange rate volatility.