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The Impact of Global Oil Prices on Tanzania's Gasoline Market
May 20, 2024  
The Impact of Global Oil Prices on Tanzania's Gasoline Market In April 2024, gasoline prices in Tanzania rose to 1.25 USD/Liter from 1.24 USD/Liter in March. Historically, prices averaged 1.02 USD/Liter from 1991 to 2024, peaking at 1.60 USD/Liter in August 2022 and reaching a low of 0.42 USD/Liter in December 1991. By the end […]

The Impact of Global Oil Prices on Tanzania's Gasoline Market

In April 2024, gasoline prices in Tanzania rose to 1.25 USD/Liter from 1.24 USD/Liter in March. Historically, prices averaged 1.02 USD/Liter from 1991 to 2024, peaking at 1.60 USD/Liter in August 2022 and reaching a low of 0.42 USD/Liter in December 1991. By the end of Q2 2024, prices are expected to be 1.27 USD/Liter, with long-term projections of 1.33 USD/Liter in 2025 and 1.37 USD/Liter in 2026, according to TICGL Economics' models.

Gasoline Prices in Tanzania: Detailed Analysis

Recent Trends

  • April 2024: Gasoline prices in Tanzania increased to 1.25 USD/Liter.
  • March 2024: The price was 1.24 USD/Liter.
  • Historical Average: From 1991 to 2024, the average price has been 1.02 USD/Liter.

Historical Extremes

  • All-Time High: The highest recorded price was 1.60 USD/Liter in August 2022.
  • Record Low: The lowest recorded price was 0.42 USD/Liter in December 1991.

Short-Term Forecast

  • By the end of the current quarter (Q2 2024), gasoline prices are expected to reach 1.27 USD/Liter.

Long-Term Projections

  • 2025: Prices are projected to trend around 1.33 USD/Liter.
  • 2026: Prices are expected to increase to approximately 1.37 USD/Liter.

Factors Influencing Gasoline Prices

  1. Global Oil Prices: Tanzania, like many other countries, is affected by fluctuations in global oil prices. These are influenced by factors such as geopolitical tensions, supply chain disruptions, and changes in production levels by major oil-producing countries.
  2. Exchange Rates: The value of the Tanzania Shilling against the US Dollar can impact gasoline prices. A weaker Shilling means higher import costs for oil.
  3. Government Policies: Taxation and subsidies on fuel can significantly alter retail prices. Changes in these policies can lead to sudden price adjustments.
  4. Supply and Demand: Domestic factors such as changes in demand for gasoline and supply constraints can also affect prices.
  5. Inflation: General inflation trends in the economy can lead to higher gasoline prices as part of broader cost increases for goods and services.

Context of Historical Prices

  • 1991 - 2024 Average: The long-term average price of gasoline being 1.02 USD/Liter reflects periods of both stability and volatility in the global and local markets.
  • Price Spike in August 2022: The spike to 1.60 USD/Liter could have been driven by specific global events such as the aftermath of the COVID-19 pandemic and the Russia-Ukraine conflict, which had significant impacts on global oil prices.

Future Projections and Economic Models

  • The projections by TICGL Economics are based on global macroeconomic models and analysts' expectations. These projections take into account current trends, historical data, and potential future events that could influence the market.
  • 1.27 USD/Liter by End of Q2 2024: This short-term forecast suggests a moderate increase in prices, likely reflecting ongoing market adjustments.
  • 1.33 USD/Liter in 2025 and 1.37 USD/Liter in 2026: These longer-term projections indicate a gradual increase, possibly reflecting expected economic growth and inflationary trends.

Economic Implications

  • Consumers: Rising gasoline prices can increase transportation costs, impacting household budgets and the cost of goods.
  • Businesses: Higher fuel costs can lead to increased operational expenses, particularly for businesses dependent on transportation and logistics.
  • Government: Price trends can influence policy decisions regarding fuel subsidies, taxation, and energy policy.

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