Energy ETF Update: Nuclear Energy, Hedging Gas Prices, Coal ETF

ETFs Are Going Nuclear

Nuclear energy was once a shunned energy source, treated and disliked as a leper, but the latest surge in crude oil and the related ETFs have many seeking other energy sources.

Will nuclear energy finally get its time to glow? Joanne Von Alroth for Investor's Business Daily reports that the image of nuclear energy is cleaning up, as surging oil prices are leaving fewer options.

Nuclear power is also getting a huge boost with the skyrocketing demand in China, India and emerging markets. This growth trend is certainly powering the Market Vectors Nuclear Energy (NLR) which is up 12% in the past month and PowerShares Global Nuclear Energy Fund (PKN) is up 9.4%.

China is actively looking to expand its nuclear program, which currently provides only 2% of its energy. Just last week, the country's officials agreed to a $1 billion joint venture with Russia to build a nuclear power plant. Russia, China, India and Japan plan to add 72 more new plants in the next several years.

Hedge Higher Gas Prices With ETFs

Energy ETFs have been abuzz for 2008, thanks to the price of light, sweet crude oil reaching historic highs, over $139 a barrel on Friday. This week, we've seen the the biggest two-day spike in oil prices ever.

The question is, have commodity prices peaked or is there more upside opportunity? If you don't have a commodity allocation, it's not too late. If commodity prices continue to rise, gains in commodity ETFs will offset your gas bills and hedge your portfolio. However, if commodities have peaked and correct from these levels, global markets should benefit.

U.S. consumers are used to lower gas prices in relation to other consumer purchases. The energy streak could go on for a period of time as global supply has been slow to increase. Demand for oil is rising the fastest in the high-growth emerging market economies, putting a stain on supply. Morgan Stanley expects strong demand in Asia that could drive prices to $150 by July 4th, reports Adam Schreck of AP.

• United States Oil Fund (USO) up 37.2% year-to-date
• United States Natural Gas Fund (UNG) up 63.3% year-to-date
• SPDR S&P Oil and Gas Exploration and Production (XOP) up 31.5% year-to-date
• iShares Dow Jones US Oil Equipment & Services Fund (IEZ) up 19.3% year-to-date

Riding the Coal ETF Plumes Of Success

A closer look at the coal oriented ETF tells us that the fund really is a bag of coal. Market Vectors Coal ETF (KOL) is a basket of 39 coal-related companies that are spread across 12 different countries, reports Steve Halpern for Blogging Stocks.

While coal is known for its sooty footprints left behind, the world uses coal for 25% of its energy, while generating half the electricity in every state in the U.S. besides California. The price of coal has been soaring, as it is responsible for 70% of global steel production, of which is also booming.

Basically, demand is fueling the coal trend, and countries like South Africa and China rely on coal for their main energy source. Even eastern Europe is dependent on coal. Meanwhile, supply distributions are interrupted, as China has shut down mines due to the massive earthquake, with reports indicating the country is down to a 12-day supply.

China will also shut down the coal factories anywhere within a 125 mile perimeter of the Olympics in Beijing, out of respect for the athletes, to reduce pollution, emissions and smog.

 

Comments

[JosephCulligan]

The details of the personal automobiles of the five oil executives that testified before Congress including full registrations

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[pachanguero]

give it a rest JOE it's you and the socialists who have got us into this mess.