Geopolitical Risk and the LNG-LPG Trade
Nektarios A. Michail, Konstantinos D. Melas
Abstract
Abstract We explore the relationship between Liquified Natural Gas (LNG) and Liquified Petroleum Gas (LPG) carrier freight rates and global geopolitical risk, while also controlling for the macro environment. Our results show that a shock in geopolitical risk significantly increases the cost of the spot charter rates for both LNG and LPG carriers, with the impact reaching around 25% for the former and 18% for the latter. Our results bear significant implications for both the companies and the countries involved in the liquefied gas trade, with its importance growing as the use of this energy source is likely to continue substituting other fossil fuels in the future.
Topics & Concepts
GeopoliticsLiquefied petroleum gasLiquefied natural gasCharterFossil fuelNatural gasNatural resource economicsGreenhouse gasBusinessInternational tradeShock (circulatory)Energy securityPetroleumEnvironmental scienceWaste managementEconomicsEngineeringChemistryPolitical scienceRenewable energyElectrical engineeringMedicineInternal medicineLawOrganic chemistryEcologyPoliticsBiologyGlobal Energy Security and PolicyMarket Dynamics and VolatilityGlobal Energy and Sustainability Research