Uranium Prices Soar Over Last Five Years
In the last five years, the OPEC basket price of crude oil has climbed more than 200 percent. There was a wave of mergers as a result. Now uranium is in the spotlight, as more nations look to build nuclear power plants for generating electricity and the major powers of the world look to control that marketplace.
According to a report by CIBC World Markets, uranium prices have increased sevenfold in the last five years and demand threatens to consume global supply. "Just like we have seen with oil, the appetite for uranium to feed the rapidly growing energy needs of the world is straining supply and driving prices up," chief strategist Jeff Rubin said in a statement.
Uranium prices have increased sevenfold... The story goes on to say that there are increasing mergers as various corporations and nations try to improve their uranium position and, in some cases, I'm sure, keep uranium under tighter controls. But the prices are the key element. It means demand for energy is outstripping supply. The mergers and prices are signs that things are changing rapidly in the world.
Whether the United States returns to building more nuclear plants or not, it's obvious that the world is in an energy crunch that metaphorically crosses many boundaries and enters new territory. Country after country and corporations around the world recognize there is a long-term energy problem and are scrambling to deal with the future. We need new technology, new ways of storing energy, more alternative energy possibilities and the investment in research that will turn new ideas into reality; the United States has usually been the nation that's best at this kind of job but at the moment we're doing very little. Instead, Washington has other priorities. We can't even get our act together on the ordinary business of talking to other nations about any number of these issues and their consequences. Even in the absence of American leadership, there are any number of issues the rest of the world needs to deal with, but it would be far better if we were involved rather than simply leaving things to Bush's favorite corporate friends or to Cheney's most paranoid proposals.
As one example, countries that can breed their own nuclear material can protect their nuclear power plants but it also opens up the possibility of a nuclear arms race in the years to come. Simply denying countries nuclear access and development is a failure to recognize changing conditions. There are solutions to some of these growing problems besides military strikes, temper tantrums, broken treaties or embargos, but they require making an effort. They require a foreign policy. We need a president who's knowledgeable and involved and barring that we need a Congress that will bring him up to speed. So far, all Bush and the Republican Congress are giving us is a new kind of isolationism and a radical conservatism that thinks very little about the future.
posted by Craig at 11:09 PM
2 Comments:
Craig,
Indeed, uranium prices are rising. But you need to understand something about the dynamics of the marketplace before declaring that there is a crisis.
First, uranium prices have been near historic lows for decades due to 1)The slowdown in new nuclear reactor build in response to rising interest rates in the 1970s and early 1980s and 2)The significant surplus in highly enriched uranium thanks to the decommissioning of tens of thousands of American and Soviet warheads. As those reserves get drawn down, it is only natural for uranium costs to rise.
Next, it's also important to note that fuel costs for nuclear power plants are only a small fraction of total operational costs. Even with this large increase in uranium costs, the effect on the price of electricity will be minimal.
Don't forget, there are a number of benefits in rising prices as well: We've already seen a number of uranium mines in the U.S. that have been shuttered for decades begin to prepare to resume operations. And mining operations in Canada and Australia, home of the vast majority of uranium reserves, are making plans to expand capacity.
However, this does not mean that challenges do not exist. Long-term, there will be a need for additional capacity for conversion services, especially as new plants come online and they need to be fueled for the first time. Still, these challenges are manageable, and being alarmist about them doesn't do the public debate much good.
Eric, the crisis I'm referring to is simply that worldwide energy demand is exceeding the capacity of energy production. This is mostly due to oil production problems. The Europeans, Russians, Chinese, Indians and others see the writing on the wall and there is a scramble for alternative sources of energy going on that will last for many years, possibly decades.
I appreciate the point about decommissioined warheads but I suspect the point still stands. A lot of my analysis is based on what other industrialized nations are doing and also on the fact that poor nations are having problems keeping a place in the energy markets.
Energy diversification is under way and whether nuclear energy can truly be part of that or ought to be part of that is a question I don't have the answer to. Feel free to follow up on that.
By the way, I was under the impression that the slowdown in nuclear reactors in the 1970s and 80s was due to Three Mile Island and Chernobyl?
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