2 Top Energy Sector Bets 21 comments
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Lots of readers have asked if The Kelly Letter is snapping up bargains in the energy sector. I've found that most people divide the sector into two groups: traditional fossil fuels and alternative energy, the latter being considered solar and wind mostly, with occasional mentions of hydrogen and geothermal.
However, the best buy in the energy sector these days has nothing to do with any of that. It's alternative energy, alright, but not the kind that gets placard-carrying crowds excited.
First, a little background. Here's where the world stands:
- Fossil fuels have peaked or will peak in the next ten years.
- Demand for energy is rising because the population is growing and more of that population is emerging into a lifestyle of high energy consumption via cars, electronic appliances, and such.
- Environmental damage from fossil fuel use is reaching a critical and, some say, irreversible stage.
- We must change to non-fossil energy sources ASAP.
The most promising way to make said change ASAP is by switching from gasoline cars to all electric cars. There are two initial problems with that: one, batteries are still lousy despite major breakthroughs in the past couple of years and promising technologies on the horizon and, two, the electric power grid is powered mostly by coal-burning power plants, and coal is the dirtiest fossil fuel.
So, we should look for investments in either batteries for electric cars or better ways to power the electrical grid for recharging those batteries. Battery companies are mostly private these days, making it hard to invest in them outside of venture capital firms. Besides, each month seems to bring a new technology and it's very hard to know which one will win out. Every inventor scoffs at every other inventor's ideas, yet they're all moving ahead briskly as a group. Selecting one winner from the collective effort is hard, and a lot closer to guessing than investing. I certainly don't have an edge.
That leaves alternative ways to power the electrical power grid, and the best one is nuclear. This confuses people because nuclear is not associated with being good for the environment, but it should be. Nuclear waste is imminently easier to control than carbon waste, mainly because there aren't millions of individual nuclear power plants driving to the grocery store. If nuclear power plants are widely implemented as a way to charge the electrical grid, there will be just hundreds or thousands, depending on various efficiencies, and they will be closely monitored by the government and private firms for safety.
There hasn't been a major nuclear power plant problem since Chernobyl in 1986, and even that killed only 31 people. Almost all nuclear "disasters" end in a handful of people being exposed to radiation, and that's it. Very rarely does anybody die, certainly far fewer than die from, say, car accidents. Finally, going forward the safety record will only improve, and that's from an already reassuring track record.
Nuclear power does not pollute, is very efficient, and would enable us to recharge car batteries with no downside. It would be cheaper than gasoline and far, far better for the environment.
It just so happens that the stocks of major players in the nuclear industry are looking cheap these days. The two I'm examining closely for The Kelly Letter are Cameco (CCJ), the world's largest uranium miner, and USEC (USU), which operates the only uranium enrichment facility in the United States and serves as the U.S. government's executive agent in the nuclear nonproliferation program with Russia.
CCJ vs. USU 1-yr chart:
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This article has 21 comments:
Should we include you in the list of volunteers for the next 31 people?
Interestingly, nuclear tends to be left out of energy sector mutual funds and out of alternative energy funds. It's like a pariah. Course it suffers the same problem as oil, and coal. Uranium is an exhaustible resource, and reprocessing fuel from breeder reactors is... politically sensitive.
So... How many people are killed falling off roofs installing solar panels?
Chernobyl is hardly a reason to avoid nuclear as it was a poorly designed early version power-plant to begin with. As is noted in the prior posts, we do have an effective and safe nuclear capacity.
jegan ;-)
I own USU. Up 6% today.
When you know this, it is unsurprising that in recent years, driven by a uranium price that briefly topped $3 per barrel-of-oil-equivale... prospectors have been finding uranium at about ten times the rate of use.
We are concerned about waste- reprocess the spent fuel like France does and store all waste beyond reprocessing's capabilities in cooling pools at the plants (for now). Is nuclear a resource that we may run out of in another century or so? Yes. However, with the reprocessing capabilities and improvements in that field, maybe we have more than 100yrs to be concerned with that aspect and we have at least that long to develop new and improved energy delivery methods. Think about how far we've already come in the last 100yrs... are you going to assume that we won't have improvements just as dramatic in the next 100? Seems pretty logical to me.
Everyone needs to keep in mind that nuclear power plants are engineered in such a manner today that even if a terrorist was to drop a bomb on a power plant, the chance of having another Chernobyl (unless the bomb itself was a nuke) are VERY slim. The rest of the world is waking up to nuclear energy and building new nuclear power plants at an astounding rate. Before you know it, America will once again find itself playing catch up with those around us- rushing to keep up and spending billions upon billions of dollars to get it done yesterday.
It takes 10 yrs to build a new nuclear power plant... the time to act is NOW!
I was stationed aboard three nuclear subs for about six years. We never had a problem. I would often go into the upper level of the reactor compartment to study because is was so clean, well lighted and quiet.
Now we have an energy crisis. And, Jimmy is still shooting his mouth off with trash!
Why would anyone listen to one who makes a statement like that? The collateral damage is still going on and it's cost in suffering (and money for those who think that's the best measurement) is too large to ignore.
Is this article the result of research or self serving cherry picking of facts that the author feels support his position? At best, a twisted point of view.
Blame Jane Fonda's movie "The china syndrome" for the hysteria that got the activists going. Carter is just a politician, and politicians will say anything to get more lobbyist money and votes from the illiterate masses.
When we wake up and start to try and catch up with France in nuclear power, we will have to overcome Pelosi and her sycophants in congress before anything can be accomplished.
It is so easy to know whom to blame, if you just find facts before spouting propaganda to thwart those with whom you don't agree.
By the way, the engineers at Chernobyl knew what was going wrong and how to avert it before it blew; they were afraid to shut it down because the politician in charge left orders to override the safeties that were being tested, then went to his dacha.