5 Must-Know Stories in Oil and Alternative Energy

1. Britain goes nuclear. The U.K. government will release a slew of energy and climate change legislation Thursday, including plans to build new nuclear reactors. Nuclear power accounts for about 20% of Britain's electricity, but its 30 reactors are aging and will have to be replaced in the next 30 years. The IHT says that Britain's support of nuclear power could "light a beacon for the beleaguered nuclear industry in other parts of Europe." Nuclear power accounts for only 16% of global electricity supply, but China alone plans to spend over $60 billion on new nuclear plants by the end of the decade.

2. Nuclear stocks in play? The U.K. policy news could boost US nuclear-related stocks. Barron's list of 9 Stocks That Will Benefit from Nuclear's Return to Power includes U.S. utilities Exelon (EXC), Entergy (ETR), Dominion Resources (D) and Constellation Energy (CEG). But uranium stocks might be a better bet given the global nature of the nuclear trend. Leading uranium plays include Cameco (CCJ), Uranium Resources (URRE) and Denison Mines (DNN). Here's complete coverage of the uranium stocks.

3. Oil price takes a hit. Having topped $100 per barrel, the oil price is now falling on concerns that a weakening U.S. economy will reduce demand for oil. But at least one commentator argues that "if we are seeing the beginning of an economic slowdown, demand for oil will moderate but there is no reason to think that the price of oil will drastically fall. The EIA predicts a continued increase in oil consumption for decades to come and an average price of $84 for 2008. The average price for 2007 was $72 per barrel." If you accept that argument, the oil ETF (USO) is still worth considering.

4. The $2,500 car means more demand for oil. Indian auto manufacturer Tata Motors (TTM) has introduced a four-door, five-seat hatchback priced at only $2,500, an achievement "less about big-bang innovations than about a long string of $20 trims". French-Japanese alliance Renault-Nissan and the Indian-Japanese joint venture Maruti Suzuki are also planning ultra-cheap cars. It doesn't matter if this isn't a car you'd want to own; it puts car ownership in the sights of tens of millions more people, and like the proliferation of cheap Chinese motorcycles in developing countries will boost demand for oil.

5. Lightbulb market takes a turn. Lighting accounts for 19% of global electricity use. Earlier this month, the U.S. Congress' Energy Independence and Security Act stipulated that incandescent lightbulbs must be phased out over the next 10 years. France plans to ban them by 2010, and Ireland has been even stricter. But there's no clear alternative for consumers. Compact fluorescent lightbulbs have problems. LEDs aren't ready for prime time, but consumer willingness to try them is high. The leading LED pure-play is Cree Inc. (CREE).

Full disclosure: no position in any stocks mentioned.

Comments

[Long-ShortGuy]

On energy efficient lightbulbs, there was a good article recently in the WSJ online.wsj.com/article... . Key excerpt:

...The China-born Mr. Yan, who moved to the U.S. in 1979, has four factories in and around Shanghai that produce more than one million compact-fluorescent bulbs a day. Most are shipped to the U.S. and sold under private labels by Home Depot Inc., Wal-Mart Stores Inc. and other retailers. General Electric Co. and Siemens AG's Osram Sylvania also resell TCP fluorescent bulbs under their names, along with manufacturing their own.

TCP is well-positioned as consumers seek alternatives to traditional incandescent bulbs. Helping to fuel the demand are governments world-wide; in the U.S., the energy bill President Bush signed into law last week will require lighting to use as much as 30% less energy, which will phase out the traditional energy-eating incandescent light bulb. Compact fluorescents use 75% less energy than incandescent bulbs and are considered the likely initial replacement for most home uses.

That has sales of compact fluorescents, known as CFLs, soaring. About 200 million CFLs were sold in the U.S. in 2006, up about 50% from the prior year. Incandescent-bulb sales fell 10% last year to about 1.5 billion bulbs, according to the National Electrical Manufacturers Association. Mike Deneen, a senior analyst with market researcher Freedonia Group Inc., Cleveland, predicts wholesale sales of CFLs will jump to $1.55 billion in 2011 from $415 million in 2006. By 2016, Mr. Deneen says, incandescent bulbs "will be like the eight-track" tape.

Mr. Yan says TCP makes 70% of the CFLs sold in the U.S. Market-share figures aren't available, but rivals concede that TCP is the largest maker of CFLs sold in the U.S., accounting for half or more of the market. GE is the biggest brand-name supplier in the U.S...

[Long-ShortGuy]

Take a look at Amazon's listing of best selling light bulbs; you can see there's not much choice:
doiop.com/qai894

[DavidJackson]

Thanks for the info -- both are useful.

[nasdaq99]

the main Must-Know story in AE is ALTI:

Their battery will:
1)take their truck 95mph w 5 passengers & 1000lb payload
2)range of 130 miles
3)recharge in 10 minutes
4)WILL NOT overheat
5)cycled 25000times in their lab(that equals once/day for 68 years!!)

They just set the world speed record of 160mph and under 8 seconds on a 1/4 mile dragstrip in AZ--it's on Youtube.

They just finished the components for a 2MEGAWATT battery for AES last month. (over 1000 homes for an hour)

That's quite a story!