Fuel Price Fluctuation and Profitability of Petroleum Company in Regulated Market of Rwanda
DOI:
https://doi.org/10.31305/trjtm2025.v05.n02.003Keywords:
fuel price fluctuation, petroleum profitability, supply chain efficiency, regulated market, RwandaAbstract
Fuel price volatility remains a critical challenge for petroleum companies operating in regulated markets. This study examined the impact of fuel price fluctuations on the profitability of petroleum firms in Rwanda, with a particular focus on Vivo Energy Rwanda Ltd. The research aimed to assess the role of supply chain efficiency, macroeconomic variables, and pricing formula components in shaping profitability. Guided by Harold Hotelling’s theory of non-renewable resource pricing, the study employed a descriptive and correlational research design, integrating both qualitative and quantitative approaches. A purposive sample of 30 respondents, drawn from petroleum company management and regulatory bodies, was surveyed. The results indicated that supply chain efficiency significantly enhances profitability, as evidenced by a mean score of 2.80 (SD = 1.297). Inflation, a key macroeconomic variable, was found to influence fuel price adjustments (mean = 2.40, SD = 1.380). Furthermore, respondents expressed skepticism about the pricing formula's reflection of international oil prices (mean = 2.27, SD = 1.258). The study concluded that improving supply chain systems, effectively managing macroeconomic risks, and periodically reviewing pricing mechanisms are essential for sustaining profitability in a volatile fuel market. Recommendations include strengthening supply chain strategies, adopting financial hedging, and revising pricing models to better reflect global trends.
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