Double-Hull Tanker Legislation An Assessment of the Oil Pollution Act of 1990 (1998) / Chapter Skim
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Appendix G
Appendix G
Pages 178-181
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From page 178... ...
over a 35-year period, for example, have shown variations of 1,000 percent (Figure G-1~. Aside from irregular shocks resulting from unexpected weather changes and political developments, freight rate volatility can be attributed to two principal causes: (1)
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From page 179... ...
It becomes apparent that the supply curve consists of a number of segments characterized by different elasticities that can be simplified as follows. If demand intersects supply at a point in the neighborhood of PO, elasticity is very high: a 5 percent increase in freight rate results in a 25 percent increase in the tonnage supplied.
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From page 180... ...
Seasonal variation in tanker demand has a powerful impact on freight rates. In 1988 and 1989, seasonality accounted for as much as a 10 percent variation in tanker demand, causing VLCC weekly time charter equivalents to vary from about $7,000 per day during the low quarter to about $27,000 per day during the high quarters, as shown in Figure G-3 (Stopford, 1990~.
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From page 181... ...
The instability can be precipitated or significantly compounded by seasonal shifts in tanker demand, which have a particularly strong effect on freight rates in periods of tight markets. The market is at its most stable when capacity utilization is low and freight rates are depressed.
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