SINCE THE BEGINNING OF 2021, WHOLESALE NATURAL GAS PRICES ACROSS EUROPE HAVE SKYROCKETED TO NEARLY FIVE TIMES WHAT THEY WERE IN 2019. ACCORDING TO RECORDS DATING BACK TO 2010, THE AVERAGE ELECTRICITY PRICE IN SEPTEMBER IN THE UK REACHED £ 189.1 PER MEGAWATT HOUR, THE HIGHEST RECORD SINCE 2010 AND ALMOST THREE TIMES HIGHER THAN THE SAME PERIOD IN PREVIOUS YEARS. CHINA'S' COAL SHORTAGE 'HAS FURTHER RAISED GLOBAL THERMAL COAL PRICES. BRENT CRUDE OIL BROKE THE THRESHOLD OF $85 PER BARREL IN LATE OCTOBER, REACHING ITS HIGHEST LEVEL IN SEVEN YEARS. SINCE THE BEGINNING OF THE YEAR, IT HAS RISEN MORE THAN 50% SO FAR. GOLDMAN SACHS STATED THAT THIS IS THE BEGINNING OF A MULTI-YEAR "STRUCTURAL BULL MARKET" IN THE OIL INDUSTRY.COMPARED TO CHINA'S RELIANCE ON COAL AS ITS PRIMARY ENERGY SOURCE, EUROPE'S DEPENDENCE ON FOSSIL FUELS IS MUCH HIGHER IN TERMS OF NATURAL GAS CONSUMPTION.FACED WITH GAS SHORTAGES, COAL SHORTAGES, OIL SHORTAGES, ELECTRICITY SHORTAGES, AND GLOBAL INFLATION EXACERBATED BY SOARING ENERGY PRICES, MANY EXPERTS BELIEVE THAT A GLOBAL ENERGY CRISIS IS TAKING SHAPE. BUT JAMES HENDERSON, DIRECTOR OF THE ENERGY TRANSITION RESEARCH PROGRAM AT OXFORD ENERGY INSTITUTE, TOLD CHINA NEWSWEEK THAT THE CURRENT GLOBAL ENERGY MARKET TURBULENCE CANNOT BE CONSIDERED A CRISIS, BUT RATHER A "SIGNIFICANT REACTION OF THE MARKET TO A SERIES OF FACTORS THAT OCCUR SIMULTANEOUSLY, CAUSING A SHORTAGE OF SOME KINDINTERWOVEN GLOBAL ENERGY MARKETSTHE NATURAL GAS PRICES IN EUROPE HAVE BEEN RISING SINCE JUNE 2020. AFTER EXPERIENCING THE WINTER PEAK IN JANUARY 2021, ACCORDING TO THE CYCLICAL PATTERN OF NATURAL GAS PRICES, THEY WILL FALL TO A LOW POINT BETWEEN MAY AND JUNE EACH YEAR, BUT HAVE BEEN RISING ALL THE WAY THIS YEAR. BY EARLY JUNE, THE DUTCH TTF CENTER PRICE, WHICH SERVES AS THE BENCHMARK PRICE FOR EUROPEAN NATURAL GAS, HAD REACHED 25 EUROS/MEGAWATT HOUR, UP FROM AROUND 5 EUROS/MEGAWATT HOUR IN PREVIOUS YEARS.ACCORDING TO THE INTERNATIONAL GAS ASSOCIATION'S THIRD QUARTER INTERNATIONAL GAS PRICE REPORT, THE SPOT PRICE OF NATURAL GAS IN EUROPE INCREASED BY 357% IN THE FIRST NINE MONTHS OF THIS YEAR, AND IN THE THIRD QUARTER, EUROPEAN NATURAL GAS PRICES INCREASED BY 2.5 TIMES. THE NATURAL GAS MARKET IN EUROPE HAS BECOME THE CENTER OF GLOBAL ENERGY TURBULENCE. EXPERT ANALYSIS SHOWS THAT SUPPLY-DEMAND IMBALANCE IS THE DIRECT CAUSE.FROM THE SUPPLY SIDE PERSPECTIVE, 2021 HAS BEEN COMPOUNDED BY MANY UNFAVORABLE FACTORS, STARTING WITH SPECIAL WEATHER CONDITIONS. LU XIAO, DEPUTY DIRECTOR OF NATURAL GAS RESEARCH AT IHS MARKIT GREATER CHINA, ANALYZED TO CHINA NEWSWEEK THAT LAST YEAR'S WINTER IN EUROPE WAS LONG AND COLD, WITH LOW TEMPERATURES LASTING UNTIL MAY THIS YEAR. HEATING GAS CONSUMPTION WAS HIGHER THAN IN PREVIOUS YEARS, CONSUMING A LOT OF INVENTORY. MEANWHILE, DUE TO FIERCE COMPETITION IN THE ASIAN MARKET, EUROPE ONLY BEGAN LARGE-SCALE GAS INJECTION INTO STORAGE FACILITIES IN MID TO LATE MAY, MORE THAN A MONTH LATER THAN IN PREVIOUS YEARS. CHINA, JAPAN, SOUTH KOREA AND OTHER COUNTRIES ARE FRANTICALLY REPLENISHING THEIR ENERGY SUPPLY, WHICH IS RELATED TO THE ENERGY STRUCTURE AND STRONG ECONOMIC RECOVERY DEMAND OF ASIAN COUNTRIES.THE REPORT FROM THE INTERNATIONAL GAS ASSOCIATION POINTS OUT THAT ASIA ABSORBS OVER 70% OF THE GLOBAL LIQUEFIED NATURAL GAS EXPORTS, CAUSING A SLOWDOWN IN DELIVERIES TO EUROPE IN APRIL AND MAY, AND IMPORTS HAVE BEEN DECLINING SINCE JUNE.THREE QUARTERS OF THE EU'S NATURAL GAS CONSUMPTION RELIES ON IMPORTS FROM NORWAY AND RUSSIA. QIN YAN, CHIEF ANALYST OF REFINITIV POWER AND CARBON, POINTED OUT TO CHINA NEWSWEEK THAT EUROPE'S OWN GAS PRODUCTION HAS DECLINED THIS YEAR, NORWAY LACKS MOMENTUM, RUSSIA'S NATURAL GAS SUPPLY TO THE EUROPEAN CONTINENT HAS BEEN REDUCED, AND IT IS NOT AS FLEXIBLE AS BEFORE. IN THE END, EUROPE CAN ONLY RELY MORE ON IMPORTED LNG (LIQUEFIED NATURAL GAS), AND EUROPEAN BUYERS NEED TO BID HIGHER TO COMPETE WITH ASIA FOR GOODS. THEREFORE, IN THE SITUATION OF TIGHT SUPPLY AND DEMAND, THE HIGH PRICE OF ASIAN LNG SPOT HAS FURTHER STIMULATED EUROPEAN NATURAL GAS PRICES, AND THE FAILURE TO REPLENISH INVENTORY HAS EXACERBATED MARKET PANIC AND FURTHER RAISED PRICES.WANG NENGQUAN, A MEMBER OF THE NATIONAL ENERGY EXPERT ADVISORY COMMITTEE AND CHIEF RESEARCHER OF THE ECONOMIC AND TECHNOLOGICAL RESEARCH CENTER OF CHINA NATIONAL CHEMICAL CORPORATION, BELIEVES THAT THERE ARE TWO "UNEXPECTED" FACTORS ON THE DEMAND SIDE THIS YEAR: FIRST, THE SUMMER MONSOON AND RAINFALL IN EUROPE ARE LESS THAN IN PREVIOUS YEARS, AND SECOND, THE DEGREE OF GLOBAL ECONOMIC RECOVERY.ACCORDING TO DATA FROM THE EUROPEAN STATISTICAL OFFICE, THE PROPORTION OF RENEWABLE ENERGY GENERATION IN EUROPE REACHED 38% IN 2020, SURPASSING FOSSIL FUELS FOR THE FIRST TIME. HOWEVER, SINCE THE BEGINNING OF 2021, EUROPE HAS EXPERIENCED A SIGNIFICANT DECREASE IN OFFSHORE WIND SPEEDS AND A SHARP DROP IN WIND POWER GENERATION. GLOBAL OFFSHORE WIND POWER GIANT DENMARK'S STORSTED ENERGY STATED THAT WIND SPEEDS FROM APRIL TO JUNE THIS YEAR WERE "FAR BELOW NORMAL", RANKING AMONG THE WORST THREE QUARTERS IN OVER 20 YEARS. RENEWABLES ARE "NOT AWESOME", AND MOST EUROPEAN COUNTRIES ARE RAPIDLY WITHDRAWING COAL, SO THE IMPORTANCE OF NATURAL GAS IN THE ENERGY STRUCTURE IS HIGHLIGHTED. CURRENTLY, NATURAL GAS ACCOUNTS FOR ABOUT A QUARTER OF THE TOTAL ENERGY CONSUMPTION IN THE EUROPEAN UNION.ON THE OTHER HAND, THE GLOBAL ECONOMIC RECOVERY HAS EXCEEDED EXPECTATIONS, ESPECIALLY IN ASIA, BRINGING STRONG GROWTH IN ENERGY DEMAND. THE INTERNATIONAL MONETARY FUND PREDICTS THAT THE GLOBAL ECONOMY WILL GROW BY 6% IN 2021, ENOUGH TO COMPENSATE FOR THE 3.5% DECLINE IN 2020. HOWEVER, EVEN SO, IF WE ONLY LOOK AT SUPPLY AND DEMAND, THE ACTUAL GAP IS NOT ENOUGH TO EXPLAIN THE UNPRECEDENTED HIGH PRICE OF NATURAL GAS AT PRESENT.ZHOU DADI, THE FORMER DIRECTOR OF THE ENERGY RESEARCH INSTITUTE OF THE NATIONAL DEVELOPMENT AND REFORM COMMISSION AND THE VICE CHAIRMAN OF THE CHINA ENERGY RESEARCH ASSOCIATION, ANALYZED CHINA NEWSWEEK THAT TWO YEARS AFTER THE COVID-19, THE UNITED STATES AND OTHER COUNTRIES HAVE TAKEN THE LEAD IN LARGE-SCALE CURRENCY ISSUANCE, BUT THE PRODUCTION ACTIVITIES HAVE NOT KEPT PACE. THE INFLATION IN THE WORLD IS FIRST MANIFESTED IN THE RISE OF COMMODITY PRICES, WHICH HAS AFFECTED THE FIELDS FROM GRAIN, STEEL TO OIL AND NATURAL GAS, ESPECIALLY IN THE ENERGY FIELD.HE ALSO POINTED OUT THAT THE PRICING MECHANISM OF ENERGY PRICES SUCH AS NATURAL GAS AND OIL IS FUTURES GUIDED SPOT, AND THERE ARE MANY SPECULATIVE ACTIVITIES IN THE MARKET, WHICH HAS ACTUALLY BECOME A FINANCIAL MARKET. IN THIS ROUND OF SURGE, THE PANIC "EXPECTATION" OF THE FUTURE MARKET HAS SIGNIFICANTLY AMPLIFIED THE MAGNITUDE OF THE TREND CHANGE BETWEEN SUPPLY AND DEMAND. FOR EXAMPLE, A 2% INCREASE IN DEMAND FOR NATURAL GAS MAY RESULT IN A PRICE INCREASE OF 20% TO 30%. IN SHORT, THE HIGH PRICE OF NATURAL GAS IS PARTLY DUE TO SPECULATION.QIN YAN ALSO OBSERVED THAT ONE-THIRD OF THE GLOBAL NATURAL GAS PRICE INCREASE IN THIS ROUND IS RELATED TO THE TRADING OF FINANCIAL DERIVATIVES SUCH AS FUTURES AND OPTIONS. HER COMPANY, REFINITIV, IS A GLOBAL PROVIDER OF FINANCIAL MARKET DATA UNDER THE LONDON STOCK EXCHANGE GROUP. QIN YAN FOUND THAT IN EARLY OCTOBER, THE EUROPEAN TTF (DUTCH NATURAL GAS VIRTUAL TRADING CENTER) PRICE "SUDDENLY" ROSE ABOVE 100 EUROS/MEGAWATT HOUR, BECAUSE LARGE INVESTMENT INSTITUTIONS HAD SPECULATIVE POSITIONS, OFTEN EXCEEDING HUNDREDS OF MILLIONS. THESE FUTURES AND OPTIONS INVESTMENT PORTFOLIOS AMPLIFIED MARKET VOLATILITY.STARTING WITH THE GLOBAL NATURAL GAS PRICE SURGE, A SERIES OF ENERGY AND ELECTRICITY PRICE INCREASES HAVE BEEN TRIGGERED, WHICH ARE NOT SINGLE LINE, BUT INTERTWINED. FIRSTLY, THE REDUCTION OF WIND POWER IN EUROPE HAS LED TO POWER SHORTAGES AND HIGH ELECTRICITY PRICES. MEANWHILE, THE EUROPEAN UNION, WHICH OWNS THE WORLD'S LARGEST EMISSIONS TRADING SYSTEM (ETS), HAS TIGHTENED THE TRADING OF PERMITS THIS YEAR, THEREBY PUSHING UP THE PRICE OF CARBON EMISSIONS. THEREFORE, POWER PLANTS TEND TO CHOOSE NATURAL GAS WITH RELATIVELY LOW CARBON EMISSIONS INSTEAD OF COAL, WHICH IN TURN RAISES NATURAL GAS PRICES. WITH THE SKYROCKETING PRICE OF NATURAL GAS, POWER PLANTS HAVE TURNED TO BURNING COAL, WHICH FURTHER EXACERBATES THE RISE IN CARBON PRICES.AT A TIME WHEN CARBON PRICES IN EUROPE ARE SOARING IN TANDEM WITH NATURAL GAS PRICES, GLOBAL COAL AND OIL PRICES ARE ALSO RISING.IN EARLY OCTOBER, CHINA'S THERMAL COAL FUTURES REACHED A RECORD HIGH OF ABOUT 1700 YUAN PER TON. ON THE OTHER SIDE OF THE PACIFIC, THE UNITED STATES HAS SEEN A 400% INCREASE IN COAL PRICES THIS YEAR. DUE TO HIGH NATURAL GAS PRICES, THE UNITED STATES HAS RESTARTED COAL-FIRED POWER PLANTS. BLOOMBERG DATA SHOWS THAT COAL CONSUMPTION BY US POWER PRODUCERS IS EXPECTED TO INCREASE BY 19% THIS YEAR, AND US COAL SUPPLY WILL BE AT A 20-YEAR LOW BEFORE WINTER ARRIVES, WITH ALMOST ALL COAL PRODUCED IN 2022 ALREADY SCHEDULED FOR SALE. IN ADDITION, THE PRICE OF THERMAL COAL IN THE THREE PORTS OF ARA IN EUROPE HAS ALSO RISEN FROM $67/TON AT THE BEGINNING OF THE YEAR TO $268.5/TON IN MID OCTOBER.