Energy Sector Commodities: How to Invest in Nuclear Power Futures - dummies

Energy Sector Commodities: How to Invest in Nuclear Power Futures

By Amine Bouchentouf

When most people think of nuclear power, they tend to think of nuclear weapons and mushroom clouds, not energy and commodities. However, nuclear power has an important civilian role, too. Civilian and commercial nuclear power is an integral part of the global energy supply chain and is a valuable energy source for residential, commercial, and industrial consumers worldwide.

In fact, nuclear power generates more than 20 percent of the electricity in the United States. In countries like France, nuclear power generates more than 75 percent of electricity!

Nuclear power currently accounts for about 5 percent of total global energy consumption, and it’s expected to remain at these stable levels until 2030. But if the price of fossil fuels rises (oil, natural gas, and coal) dramatically enough to start affecting demand (creating what is called demand destruction), nuclear power may play an important role in picking up the slack.

One way you can profit from increased interest in nuclear power is to invest in uranium, the most widely used fuel in nuclear power plants. However, you’re not likely to hear about this opportunity from your local financial media because uranium is a pretty obscure investment area.

But sometimes as an investor, you need to be able to think creatively and look at opportunities that other investors haven’t considered. Investing in uranium to benefit from the increased demand in nuclear power is not a well-known or well-advertised investment play, but it can be profitable nevertheless.

You may be surprised to find that the period of 2000–2008 saw a major bull market in uranium, with prices moving from $20 per pound to almost $140 per pound.

The Global Financial Crisis brought some sense back into the market, as this commodity attracted many players of a speculative nature. Prices post-2008 went back to above pre-crisis levels, to a more reasonable $50 per pound, and this presents a potential opportunity for the discriminating investor.