The Inevitable Move to Nuclear Energy
At the risk of going off on a tangent today, I'd like to briefly address several of your concerns about oil prices. Whether or not you believe oil is going to head lower (as much as $10 a barrel) over the next few months, the fact is that even a drop to $90 a barrel (however unlikely) still means that prices are remarkably high. After all, twelve months ago we were told oil would fall under $40 a barrel. Trust me, watching the daily swing of oil prices can drive you insane. But making oil predictions isn't what gets me up in the morning. Anyone who knows about the widening gap in supply and demand can tell you prices will increase. I'm positive that even skeptics will admit that energy prices have been out of control for the last few years. In the words of one of my readers, "I'm not interested what oil prices will be this week. Rather, I want to hear about what's in store for the future." Curbing Our Oil Addiction Like it or not, the world is going to change its oil consumption habits. The U.S. is already making plans to cut its dependence on Middle Eastern oil. The catch, however, is that oil is a finite resource, so eventually we're going to turn somewhere else. The total amount of oil that's left isn't the problem. Rather, it's getting to that oil, and the cost to extract that oil in the next few decades is going to reach a breaking point. It'll simply become too costly for producers. The good news is that there has been remarkable advances in renewable energy sources, but the problem I have with sources like solar, wind or other renewables is scale. Does that mean we should scrap all of our renewable projects? Absolutely not, I'm only worried about whether they can satisfy our energy demands on such a massive scale. So where are we going to turn? The Nuclear Renaissance Nuclear energy currently supplies about 16% of the world's electricity. Countries like France and Sweden have already proven that nuclear power is affordable. After all, nuclear energy provides over 70% of their electricity. We're talking about a lot energy, too. During the fission process, one pound of uranium (U-235) releases the same amount of energy than 6,000 barrels of oil! Commercial nuclear power plants have been around for over fifty years, so the technology isn't new. There are 439 nuclear reactors operating around the world, with another 33 currently being built. Furthermore, another 94 reactors are on order or planned and an additional 222 reactors have been proposed. Still don't believe that nuclear energy is undergoing a revival? In England, nuclear plants might be built on as many as sixty sites. The move would force some of the coal or gas-fired plants to close, and the government has made it clear that some of these new plants will be built by 2020. I wouldn't be surprised to see a few operating before 2015. There is, however, a catch... A number of issues must be dealt with in order for nuclear energy to continue growing. The largest obstacle comes with the waste. According to the World Nuclear Association, "Nuclear power is the only energy-producing technology which takes full responsibility for all its wastes and fully costs this into the product." Investing in Nuclear Energy For investors, there's a few options available. The easiest way is through uranium. Although uranium prices have cooled off since peaking around $140 per pound this summer, production is still coming up short. Remember that uranium consists of such a small part of a power plant's budget, the current price of $90 a pound is cheap. Uranium companies aren't the only way to invest in nuclear. Utility firms like Exelon Corp. (NYSE: EXC) has performed well over the last two years. Since the beginning of 2006, the Redhall Group (LON: RHL) has earned over 700% for investors. Not a bad chunk of change. The Next Step Don't think for a minute that the nuclear show will stop with uranium. On Thursday, I'm going to show you another source of energy that could fuel the world's energy demands for thousands of years. Until next time, Keith Kohl ***
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