Final answer:
Energy trading is volatile due to short-term political and economic factors causing an 'energy trap', intermittency of renewable resources, market upheavals from resource disruptions, inflation effects, and influences from government incentives and global corporations.
Step-by-step explanation:
Energy trading experiences volatility due to a variety of factors. Short-term political and economic interests can interfere with investments in new energy, leading to an energy trap, where a major crisis in energy shortages arises before sufficient energy is obtained to address it. Furthermore, yearly declines in fossil fuel resources can lead to difficulties in political decision-making as transitioning to renewable energies requires hefty investment and sacrifice, while providing immediate relief through non-renewable sources is politically tempting.
Another contributor to volatility is the intermittency of renewable energy sources such as solar and wind, which do not provide a consistent supply of electricity. Additionally, resource disruptions can cause significant market uncertainties, potentially leading to global military actions. Moreover, inflation can prompt erratic and slow market adjustments to equilibrium prices, increasing the occurrence of surpluses and shortages.
Government incentives and global energy corporation influences also play a role in shaping the energy market. For instance, biofuels are heavily subsidized and can artificially influence the pricing and perception of energy supply. These complexities, among others, contribute to the volatility seen in energy trading markets.