Is Nuclear Energy Ready for a Comeback?

Mon, Apr 21, 2014 - 1:46pm

By FS Staff, based on the recent interview with Marin Katusa, "Is There Hope in the Uranium Sector?"

For a short while it seemed that nuclear power was poised for a revival. Then Fukushima happened and public sentiment once again turned sour, with many government leaders around the world shutting down their plants. However, as fears caused by the Fukushima incident begin to fade, Marin Katusa says that the bullish factors for nuclear energy are starting to resurface again.

As we slowly move away from coal and more towards cleaner alternatives, the Senior Market Strategist at Casey Research said in a recent interview with Financial Sense Newshour that nuclear power is not just an option, but a critical and necessary component for meeting growing electricity demand that cannot be met otherwise:

"20% of all the US's electricity generation is via nuclear energy. That is one in every 5 homes. And the reality is the grid, the base load power grid in North America, cannot function without nuclear energy."

Mr. Katusa also says that green energy, like wind and solar, simply cannot meet base load electricity demand. Even natural gas, which is now being heralded as the answer, faces a problem where short-term fluctuations in price lead to large swings in the cost of electricity for consumers—a problem that is minimized with nuclear energy:

"When the polar vortex hit North America, natural gas basically doubled. That doubling in cost increases your electricity costs by 70%. If the uranium price went up 10 times, let's say it went from $35 to $350 per pound, it would make up a less than a 15% increase to the cost of electricity generation. That just tells you if you want to create an economy, you have to create stable electricity prices because your GDP is directly correlated to your energy consumption."

When it comes to carbon emissions, Mr. Katusa is emphatic, saying that nuclear energy is the greenest form of energy and has the lowest CO2 footprint. When compared to the number of deaths or accidents caused from coal mining, moving oil by rail, or even LNG, Mr. Katusa also says that nuclear is far safer, even when you include every nuclear disaster that has occurred.

So, if all this is true, why does he think we are so afraid of nuclear energy?

"A lot of it comes down to misinformation, because people don't understand what nuclear energy is. It goes back to the China Syndrome where Jane Fonda made a movie that hit people's fear. You even have the Simpsons where Homer Simpson is working at a nuclear power plant [and wreaking havoc on the environment]. It's so easy to pick on the industry, but the facts are very different than what the people—the environmentalists—are going after. They're going after their emotions. It's very similar to what's happening in Europe right now with fracking where the environmentalists are going after emotions and fear rather than the science. That's a good comparable to what the nuclear sector is experiencing right now."

Still, Mr. Katusa says that there are a number of factors coming together for nuclear once again, noting that even Japan will be turning some of their reactors back on due to skyrocketing energy costs. With uranium prices currently at 9-year lows, Mr. Katusa and Financial Sense Newshour host Jim Puplava discussed the best companies speculative investors should be aware of if uranium prices start to rise. One of the most obvious and popular plays is Cameco Corporation (CCJ), which is one of the world's largest publicly traded uranium producers.

Is nuclear energy ready for a comeback? Mr. Katusa seems to think so. Then again, another nuclear incident, no matter how small, could put the already defeated sector into a long and protracted winter with public sentiment already against it. What do you think?

To hear this full 30-minute interview with Marin Katusa, Senior Market Strategist at Casey Research, on the uranium and nuclear sector please login or click here to subscribe.

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