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investing in nuclear energy

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    Investing in Nuclear Energy
    2008-02-26
    By Keith Kohl


    Sometimes a conversation or issue can spark an old memory. That's exactly what happened yesterday when I was talking with one of my readers about the role that nuclear energy will play in the future.

    "After all," I pointed out to her, "we can only ride fossil fuels for so long. Even if we make it to 2030 without any catastrophic problems in production (let's just assume for now those rosy predictions of world oil demand falling are true), oil's time is going to come to an end. And think about this: by the time we reach that point, our demand may be too much for most renewable sources to make up."

    To be honest, her response surprised me...

    "So let me ask you, when was the last time you went through an atomic bomb drill?" she said casually.

    You see, the second I started talking about nuclear power, her thoughts immediately went back to her experiences in elementary school.

    "Kids today might have fun missing a test because they have to shuffle out of the school during a fire drill," she continued, "but it was a lot more frightening back then, at least it was for me. Picture your class huddling underneath tables in the school's cafeteria. Suddenly, your teacher starts yelling at you because you're facing a window. Sometimes it was pretty terrifying."

    Perhaps some of my readers have a better idea of what she went through, yet I couldn't help wondering whether or not huddling inside a cafeteria would have been enough to save them in the event of a real atomic blast.

    The stories she told me over the next hour proved to me how much of a stigma nuclear energy still has for certain people. To some, the idea of nuclear power conjures mushroom cloud images and disasters like Chernobyl.

    The fact remains, however, that nuclear energy (although it does have several obstacles to overcome) has been getting a lot of attention over the last few years, especially since energy prices have taken off.

    And whether we like it or not, nuclear energy is on the horizon....

    Nuclear Energy Revival: 104 and Counting


    There are approximately 104 nuclear reactors operating in the U.S., accounting for roughly 20% of the total electricity we generate.

    If you really want to see where this industry is headed, just look at what we have planned for the future. Right now, there are 34 nuclear reactors being built around the world, with 93 on order or being planned and another 222 reactors that have been proposed.

    Yet we aren't the only country interested in boosting our nuclear power...

    Recently, Britain also decided that nuclear energy may be the way to go. The government just gave energy companies the green light to develop and build new nuclear power plants. The first new power plant could be ready within the next ten years.

    Last July, Russian President Vladimir Putin announced Russia will double their nuclear energy by adding another 26 power plants. Of course, this is on top of another sixty the country expects to export over the next twenty years.

    It's practically impossible to talk about the world's growing energy demand without mentioning India and China. Each is taking a different path with nuclear energy.

    For those of us looking to invest in the burgeoning nuclear industry, however, there are a few worthy options available...

    Investing in Nuclear Energy

    Perhaps one of the easiest ways to invest in the nuclear industry is with Market Vectors Global Nuclear Energy ETF (AMEX: NLR). This fund puts at least 80% of its total assets into companies that get at least 50% of their revenues from the nuclear industry. This investment is a great way to play the field.

    Naturally, another opportunity for investors is in uranium. Ever since Cameco's flood at Cigar Lake, the supply side has become tighter. Cameco isn't expecting to start up production at the mine for at least another two years-assuming everything goes as planned.

    Uranium prices have since cooled from the summer's high of $136 a pound. Don't forget when uranium cost a under $10 a pound back in 2000. I'd say that's quite a jump.

    So is uranium going to keep falling?

    I wouldn't say that just yet...

    Remember, mines can only supply about 60% of the world's demand. The rest of the supply is mostly taken from old Russian nuclear warheads. Russia, however, is planning to double its nuclear industry, so how long will it be until they decide to stop giving away that uranium? I guess we'll soon find out... since the 'Megatons to Megawatts" program is set to expire in 2013.

    I'd say uranium prices could break July's peak of $136 a pound before 2010... and once that program expires, the sky's the limit. Now that people are starting to accept $100 oil, how far away are we from $500 uranium?

    Until next time,



    Keith Kohl

    www.energyandcapital.com






    www.energyandcapital.com
 
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