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Geopolitical Risk and the LNG-LPG Trade

Nektarios Michail and Melas Konstantinos D. ()
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Melas Konstantinos D.: Department of Economics, University of Western Macedonia, Kastoria, Greece

Peace Economics, Peace Science, and Public Policy, 2022, vol. 28, issue 3, 243-265

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.

Keywords: geopolitical risk; LNG; LPG; international trade; shipping (search for similar items in EconPapers)
JEL-codes: G11 G12 G13 G20 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1515/peps-2022-0007

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