Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Nuclear Power, the Real Money to be Made in Copenhagen Conference

Commodities / Energy Resources Dec 11, 2009 - 11:04 AM GMT

By: Q1_Publishing

Commodities

Best Financial Markets Analysis ArticleMore than 1,200 limos, 140 private jets, and an additional 40,000 tons of carbon dioxide have converged on the Danish capital of Copenhagen this week to “save the world” from climate change.


There will be a lot of media coverage and grandstanding. But we don’t expect much except for plenty of theatrics and non-binding resolutions. We expect the most interesting aspect to be the inevitable competition among the alarmists trying to devise a prophecy more radical than the next (think Congress sound bites on steroids).

There is, however, one very important sideshow to this circus. A sideshow investors should pay close attention to because it will prove to be exceptionally lucrative as one energy sub-sector (it's not what you think) becomes more profitable than it already is.

The Greater of Two Evils
In order to show the U.S. is serious about climate change, the EPA decreed that carbon dioxide is a dangerous pollutant earlier this week.
The political ultimatum from the Obama administration was aimed squarely at Congress – “You can do something, or we’ll do something.”

After that, it’s safe to say regulation of carbon dioxide emissions in the U.S. is all but inevitable.

That’s why we’ve got to jump ahead to where the opportunity will be.

Now, as with all government economic intervention, there are unintended consequences. And there are unintended winners and losers. That’s why when the government takes a bigger step into a specific industry, one of the safest and most lucrative things to do is figure out the unintended winner.

Carbon regulation will be no different.

In this case, the end result of more regulation – whether through EPA decrees or cap-and-trade – will be an increase energy prices.
It doesn’t matter which system. The results will be the same.

For example, the lesser economic evil is cap-and-trade. It is specifically designed to push electricity prices higher. And that’s exactly what it will do. The University of Missouri recently released a study where its electricity costs would increase by 50% under the proposed cap-and-trade scheme. The Heritage Foundation found electricity prices would increase by 90% under cap-and-trade.

The EPA regulations would likely be even worse. The President of the U.S. Chamber of Commerce says the EPA regulation “could result in a top-down command-and-control regime.” And we all know what the resulting politically allocated capital resources would lead to – higher prices.

Either way you look at it, we have higher prices. Option A – higher prices. Or Option B – higher prices.

One Big Winner

Higher prices are bad for consumers and good for producers. So the winner will be in the producers.

There are basically three types:

Low-Cost/High-Carbon – this is the fossil fuels – coal, oil, and natural gas. They are cheap, but they produce the most greenhouse gases.

High-Cost/Low-Carbon – this is the alternative sources like wind and solar. They produce very little carbon, but they are very expensive to build and operate.

Low-Cost/Low-Carbon – the perfect combination – nuclear. Nuclear power is cheap (aside from the high start-up costs which are amortized over 40 years or more) and produces very little carbon. It’s the best of both worlds.

Economically, fossil fuels and nuclear are a win because of their low costs.

But once you attribute a cost to carbon, the cost benefits of fossil fuels are reduced or eliminated.

Nuclear, as the only source of low-cost and low-carbon electricity, is the clear winner.

The Easy Way to Win

Of course, investing in nuclear power isn’t exactly easy. There are a lot of popular ways to get in on the benefits of nuclear power. But there is one great way.

One popular way is uranium mining. For years there has been a supply/demand imbalance for uranium. Will it ever pan out? No one knows. But we do know one thing, mining is risky. There are even more risks when it comes to uranium mining though.

Basically, a rise in uranium demand, which would make miners better positioned to get better prices, is predicated on the massive scale of new nuclear power plants. So far the world has lagged far behind the aggressive nuclear power construction plants of the last few years.

So uranium mining may be a good way, but on a risk-adjusted basis, it’s hardly the best way.

Another way is with what your editor calls the real supply crunch coming in uranium. That’s in enriched uranium. Uranium is useless in a nuclear reactor unless it is enriched. And that’s where the real supply crunch will hit.

The problem here is there are very few pure-plays on enriched uranium. And the easiest pure-play to invest in is USEC (NYSE:USU), and USEC is actually facing the most headwinds.

Back in 2007, investors were jumping over each other to bid up USEC shares. USEC’s American Centrifuge, a brand new enrichment facility, was making headlines and USEC shares flew to new 10-year highs.

At the time your editor felt pretty lonely saying USEC was “using a seriously outdated enrichment process.” Technically, they were using a process developed for the Manhattan Project. And its well-publicized American Centrifuge project was “facing constant delays and budget overruns” and, basically, wasn’t going to work anytime soon.

Jump ahead two years and USEC shares are down more than 80% after the Department of Energy (DOE) refused a loan request form USEC. The DOE officially said the rejection was due to “technical and financial hurdles” resulting from the American Centrifuge project.

That’s why the final way to reap the benefits of nuclear power is the best.

Yesterday, your editor recommended Prudent Investing readers should buy shares in the largest nuclear power plant operator in the United States. It’s practically a pure-play on low-cost/low-carbon nuclear power being in the best position to reap the rewards of any legislation or regulation which increases the price of electricity.

Nuclear power may not be supported by the Obama administration. And the conference to “save the world” will be more focused on getting more windmills and solar panels installed rather than more cooling towers constructed. But nuclear power is still the cheapest low-carbon source of power in the world.

The world leaders’ goal of pushing electricity prices higher to make their politically favored forms of power generation more economical, is only going to make nuclear power – and the companies that own the power plants – more valuable in the long run.

That’s why when pundits talk about the Copenhagen conference benefitting certain alternative energy companies, they may be right or they may not be. The one thing we do know is that anything that comes out of the conference, EPA, or Congress is going to be nearly an inevitable win for nuclear power. And the nearly inevitable is going to be where I put my safe money and hope you do to.

Good investing,

Andrew Mickey
Chief Investment Strategist, Q1 Publishing

Disclosure: Author currently holds a long position in Silvercorp Metals (SVM), physical silver, and no position in any of the other companies mentioned.

Q1 Publishing is committed to providing investors with well-researched, level-headed, no-nonsense, analysis and investment advice that will allow you to secure enduring wealth and independence.

© 2009 Copyright Q1 Publishing - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

FRE
17 Dec 09, 16:42
Errors in article
The article mistakenly assumes that all nuclear energy must come from enriched uranium. THAT IS NOT TRUE!!

The fact is that thorium can be used in nuclear reactors. Thorium reactors are a proven technology. Moreover, the waste from thorium reactors is very small and decays quickly, so it need to be sequestered for only a few hundred years.

Also, reactors have been made that will work with natural uranium, i.e., uranium which has not been enriched.

Fast breeder reactors can use existing nuclear waste as fuel, thereby eliminating the reactor waste storage problem. By reprocessing the waste on site, nuclear proliferation and the waste problem are eliminated. The resulting waste is a tiny fraction of the waste generated by pressurized water thermal reactors, and because the waste decays quickly, it needs to be sequestered for only a few hundred years instead of thousands of years.

These are all tested and proven technologies. They completely eliminate the obsolete objections to nuclear power.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules