Trading network and systemic risk in the energy market

摘要

This paper evaluates the effect of energy trading networks on the volatility of coal, oil, natural gas, and electricity. This research conducts a longitudinal analysis using a time series of static coal trading networks to generate a dynamic trading network, and uses the component causality index as a leading indicator of systemic risk. This research finds out that the component causality index, based on degree centrality, anticipates or moves together with coal volatility and in less degree with gas and electricity volatility during the period 2007-14. The broad impact of this research lies in the understanding of mechanisms of the instability and risk of the energy sector as a result of a complex interaction of the network of producers and traders.