Energy is suddenly becoming much cheaper in the UK and Europe, rapidly narrowing the gap in industrial competitiveness with America and rescuing households with a windfall stimulus as we enter 2026.

The January futures contract for wholesale gas has been almost halved since the last northern winter to €27.39 ($48.50) a megawatt hour. The contract is even lower for January 2027, and lower yet for early 2028 and 2029 as traders anticipate the gathering global glut of liquefied natural gas (LNG).

Donald Trump’s America is going to lose the energy race on two fronts.Credit: Bloomberg

Brent crude oil has fallen to the lower end of its historic trading range in real terms. This is unlikely to change as Saudi Arabia floods the market to regain lost global share, and as the US over-drills in a fast-changing world that no longer wants as much crude as Big Oil likes to tell itself.

The International Energy Agency estimates that global oil supply will rise by 5.7 million barrels a day over this year and next, while demand will rise by 1.6 million. The structural overhang is colossal. It will be even larger if Vladimir Putin is let back into polite society.

The net effect of the twin gluts in gas and oil is a relief package worth $US1.2 trillion ($1.8 trillion) a year for countries that import energy, and a commensurate loss in rents for OPEC, Qatar, the US, Canada or Norway.

Most of America’s shale gas output has been trapped inside the country – and even within regions of the US – since the fracking revolution reached scale in the early 2010s.

The wholesale cost of gas in Europe in mid-2022 was seven times higher than the Henry Hub price enjoyed by the booming petrochemical belt from Texas to Louisiana, or the Chicago region drawing on the Appalachian Marcellus and Utica basins.

Today it is 2¼ times higher. The gap will narrow further as the US opens new........

© The Sydney Morning Herald