Modelling Petroleum Prices in Tanzania: A Comparative Analysis between ARIMA and Holt’s Method

Gasper, Laban; Abrahamu, George Andwilile

doi:10.5281/zenodo.10064237

Document Type : Original Research

Authors

Department of ICT and Mathematics,. College of Business Education (CBE), P.O. Box 2077, Dodoma, Tanzania

https://doi.org/10.5281/zenodo.10064237

Abstract

Petroleum is one of the vital sources of energy for economic activities and the most traded commodity worldwide. It is crucial to industry and civilization and as it meets a substantial portion of the world's energy requirements, it has a big impact on global politics and intergovernmental relations. Given the importance of oil to the economy, projecting crude prices has received a lot of focus in the literature. The primary goal of this research is to assess how well Holt's technique and Autoregressive Integrated Moving Average (ARIMA) forecast the petroleum prices in Tanzania. To determine whether the model is more reliable at predicting the prices of petrol in Tanzania, a comparative analysis was perfumed. Monthly data on petroleum prices were extracted from the bank of Tanzania website between February, 2004 to May, 2023. The mean absolute percentage error (MAPE), mean absolute error (MAE), and mean squared error (MSE) were used to evaluate the predictive ability of the ARIMA and double exponential smoothing models. The findings indicated that ARIMA (1,1,1) outperformed double exponential smoothing model for forecasting the prices of petrol in Tanzania. The result of this study will guide policy makers and investors in the energy sector to make wise decisions through accurate prediction of the price of petroleum in the future.

Keywords

20.1001.1.23832126.2023.10.9.1.0

Main Subjects

©2023 The Author(s). This is an open access article distributed under the terms of the Creative Commons Attribution (CC BY 4.0), which permits unrestricted use, distribution, and reproduction in any medium, as long as the original authors and source are cited. No permission is required from the authors or the publishers.

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International Journal of Management, Accounting and Economics

Modelling Petroleum Prices in Tanzania: A Comparative Analysis between ARIMA and Holt’s Method

References

References

Volume 10, Issue 9 - Serial Number 110
September 2023
Pages 644-657

Modelling Petroleum Prices in Tanzania: A Comparative Analysis between ARIMA and Holt’s Method

References

References

Volume 10, Issue 9 - Serial Number 110September 2023Pages 644-657

Volume 10, Issue 9 - Serial Number 110
September 2023
Pages 644-657