The Nuclear Future $$Our Nuclear Future
The signs of our nuclear future are all around us. We just have to pay attention to the world.
First off, however, we need to realize that our global energy situation is about to make a monumental change. Peak oil is looming on the doorstep (many experts argue it's already here). Don't forget our daily addiction to 85 million barrels of oil. We'll have to make that up when the oil stops flowing.
But I'll get to nuclear power in a second. Let's jump right into uranium.
Right now, uranium mines are only producing 62% of the global demand. The balance is coming from sources such as government stockpiles, used reactor fuel that has been reprocessed, and uranium from nuclear weapons and depleted uranium stockpiles.
The uranium coming from those nuclear weapons is running out fast. Within a few years, uranium production will have to make up for that loss. That doesn't sound very promising, considering it can't even meet our current demand!
Back in April's Energy and Capital, we saw exactly how many new nuclear power plants will be built within the next ten years.
There's two important things to note about nuclear power plants.
The first is that they offer a cleaner way to generate electricity on an enormous scale (nuclear plants have no harmful emissions). We need energy on a global scale. Most alternative fuels don't come close to generating that much. France gets over 70% of its electricity from nuclear power. China also recognizes this potential, signing a deal for Australian uranium producers to supply their plants. China expects to generate all their future electricity from nuclear plants.
The second note about nuclear power plants is that they are simply more economical than fossil fuel power plants. Nuclear power is less expensive compared to fossil fuels or any other form of electrical generation.
Here's what it comes down to.
Uranium prices right now are cheap. The truth is that uranium is only 5% of the cost of running a nuclear reactor. Oil powered plants spend roughly 40% of their money for fuel.
The thing is, when uranium hits $255 per pound in 2008, it'll still be cheap for these plants.
Yesterday I read about an analyst predicting that uranium will fall to $70 per pound in ten years.
Personally, I think it'll break $500 a pound in half that time.