Introduction
The US is on the move and the geopolitical scenario has moved quickly away from the certainties of the last ten to fifteen years. Oil could come down to a price well below US$50-per-barrel, with prices for other petrochemical products falling in concert. That would spark an economic upswing in the USA, lowering prices for consumers and other businesses.
This is in stark contrast to the energy markets in the EU and UK: highly regulated, highly priced, and being directed by authorities to eliminate the usage of oil and gas in the name of achieving Net Zero.
Recent events open up a chasm between the US approach and the UK/EU approach, a chasm that will manifest itself in radically different output prices for the same end-product. Where markets are connected, the low-price supplier (US) annihilates the high-price supplier (UK/EU).
Meaning of US moves towards Greenland, Guyana, and Venezuela
The US’ moves reduce the channels for Russia and China to exercise influence over the Americas – a reinforcement of the Monroe Doctrine.1 They also ensure that sources of supply of raw materials are exploited and marketed in a way that coalesces with US policies.
The supplies are not being stolen, but they stop being used to prop up hostile regimes in the country where they exist (Venezuela), or in countries allied to the ones where they exist (Cuba, North Korea).
We are looking at a classic supply-side reform: weakening the power of suppliers by merging their supplies into a single, homogenized market. Within the classic Porter’s Five Forces model for examining the dynamics of a marketplace, such a melting of barriers results in more choices for buyers, more certainty of supply, the ability to choose the lowest-price offering, and lower prices generally.2
This reverses the recent trend of businesses being concerned about their ability to access supplies, which sapped confidence, raised prices along the supply chain, and led to inflation.
Prospects for the world prices of fossil fuels
Whilst heightened geopolitical tensions over Greenland may push up prices in the short term, the outlook beyond that is for considerably lower world prices for oil and gas.3
More sources of supply are coming onstream in the US and Middle East, notably of Liquefied Petroleum Gas.4 The price of propane already fell from an average of US$628 per ton to 2024 to US$548 per ton in 2025, or by 13%.
Further supply being channelled into the market from Venezuela, Guyana and anywhere else will act as an accelerator of the decline in price, and we can expect to see crude oil trading down from its current price (US$60-per-barrel) to US$50-per barrel and below.
Meaning of UK and EU drive towards Net Zero
The meaning of UK’s and EU’s drive towards Net Zero is firstly that they foreswear exploitation of any sources of fossil fuel supply that are under their control. This affects the UK most of all and results in the shutting down of extraction from the North Seath and the granting of no new licences for exploration and extraction.
It means a switchover from usage of gas to usage of electricity, to drive industrial processes and for domestic purposes like cooking and heating.
It means spending large amounts of money on renewable electricity sources: new nuclear power stations, construction of on- and offshore windfarms and of solar panel farms, as well as investing in the facilities to connect these sources of electricity supply to the power distribution grid.
In order to make these projects investable – without the government borrowing the money and building the facilities themselves – prices paid for electricity by businesses and individuals need to be regulated and to be kept at a high level. Businesses and individuals must be denied access to alternative sources of supply, and they must be denied the option of not buying at all.
In the Porter’s Five Forces Analysis model this equates to a weakening of the power of buyers and the strengthening the power of suppliers, the opposite of classic ‘supply-side’ reforms. Ironically the proponents of the economic model that sits behind Net Zero refer to it as ‘modern supply-side’.
Prospects for the UK as an economy dependent on free trade
UK businesses, paying high energy prices and with no alternative source of supply, will find that their output prices are considerably higher than competitors in countries producing in the US or in other countries that have embraced the US’ revitalised system.
This will affect a business in line with how much of its industrial process requires high inputs of energy, as well as comparative employment costs, transportation, and friction costs.
Liberal free trade agreements allow price advantages garnered in one country to be deployed in another. For the UK that means that foreign suppliers can factor any domestic price advantages into their trading terms with the UK, and it means that UK suppliers will be exposed to the domestic price advantages of any supplier into a foreign market that is open to UK suppliers: this applies both to suppliers within that country and to third-country suppliers where they enjoy market access.
Brexit enabled the UK to sign free trade agreements with countries that the EU would not sign such agreements with, and the effect of that should have been:
- To open new and sizeable foreign markets to UK businesses;
- To make non-EU supplies available to UK businesses and consumers at prices lower than was possible under the EU’s tariff regime (e.g. sugar imported from Brazil, now no longer subject to EU tariffs that made French sugar cheaper).
The UK’s drive to Net Zero should accelerate (2): many more foreign suppliers will find that they can undercut UK suppliers in the UK, notwithstanding transportation and friction costs.
The drive to Net Zero will squander, and completely, the potential under (1).
The upshot is that UK businesses will no longer be price-competitive in either their domestic market or a foreign one.
Prospects for the EU as a protectionist economy
The EU is committed to international trade in two ways only:
- To obtain cheap supplies if there is no source of them within the EU: if there is, tariff and regulation barriers protect the EU supplier;
- To create export markets for EU suppliers.
As the EU is also driving towards Net Zero, it will be compelled to reduce foreign trade under heading (1) in order to protect EU suppliers who become increasingly cost-uncompetitive. The barrier need not be tariffs, but complex and demanding regulation.
Heading (2) will be increasingly challenging as EU suppliers become more cost-uncompetitive, and where the export market in question has open trade agreements with countries that participate in the US-led system and/or has its own cheap sources of energy.
The EU’s classic response will be to increase trade barriers through regulation, believing that the Single Market is large enough for the EU to turn in on itself: the long-term prospect of that approach will be to entrench the stagnation it has experienced so far during this century.
Summary and conclusions
The US’ moves on the geopolitical level pose difficult questions for the UK and the EU because they promise far lower fossil fuel prices and ample supply. Both the UK and EU are driving towards Net Zero and imagining that this will make them cost-competitive with the US and globally, but in reality it will lock in high electricity prices that make UK and EU businesses uncompetitive.
The EU’s response is likely to be more regulation and an attempt to throw trade barriers around itself, leading to a continuation of its stagnation: the EU will destroy its economy over the medium-term.
The UK, through Brexit, has positioned itself to be part of a global free trade system, but Net Zero will ensure that the advantage of this is squandered. Indeed, the UK economy could be laid waste.
1 https://www.archives.gov/milestone-documents/monroe-doctrine accessed on 19 January 2026
2 https://www.investopedia.com/terms/p/porter.asp accessed on 19 January 2026
3 https://www.woodmac.com/press-releases/wood-mackenzie-estimates-that-energy-costs-across-all-european-industrial-sectors-could-fall-by-39-billion-by-2032/ accessed on 15 January 2026
4 https://www.sunsirs.com/uk/detail_news-29623.html accessed on 13 January 2026
Photo by Atik sulianami
