Iran's nuclear activities should lower oil prices

Oil prices continue to increase with depressing regularity, mainly due to fears that the available supply will not continue to match the growth in demand.

It is truly a strange world when one of the main contributors to that fear seems to be the fact that a major oil exporting country is working diligently to provide the world with new sources of supply. Iran is making large investments in its nuclear power capabilities and its representatives keep patiently explaining to the world that this effort is focused on providing a new source of indigenous electricity.

Since Iran currently burns oil and natural gas to provide its people with electricity, it is obvious that replacing that supply with nuclear power reactors would free up oil production capacity that could then be used to supplement current oil exports.

Apparently, however, the nuclear non-proliferation establishment cannot understand the basic math involved here. Iran recognizes that there are plenty of customers in the world that are willing to pay more for oil than Iran can afford to charge its own electric utilities without hurting electricity consumers. Since Iran’s people and government apparently trust their highly educated engineers and scientists – many of whom received their advanced degrees in western universities – to work with leading world suppliers to build safe nuclear power capabilities, it makes sense to move towards using their own domestic uranium resources to provide electricity at home while enabling more oil to be sold for export.

The world should be encouraging this logical investment decision – especially since Iran is a signatory of the Nuclear Non-Proliferation Treaty and has agreed to abide by a safeguards regime.

Instead, powerful, but shortsighted people are raising alarm and threatening a major oil supplier with sanctions simply because that country has expressed its desire to build upon its long term history as a player in the energy business, not just a consumer.

The main issues that concern the “international community” is the fact that Iran wants to have its own capability to enrich uranium and the fact that their technical specialists have worked on some enrichment technologies and plutonium applications without providing details about what they were doing.

The reaction to these two issues by the non-proliferation establishment betray a lack of understanding of a crucial technical detail of atomic energy production and a lack of understanding about trade secret protection.

It is simpler to build small fission reactors with enriched uranium or plutonium than it is to build them with low enriched uranium. Until very sophisticated designs were available, essentially all research reactors – those small, extremely safe pool type systems often located on university campuses – used HEU based fuel. Most mobile reactors for ships, remote site power and space applications have used HEU.

Many nations, including Iran, do not need many huge central station power plants using LEU or natural uranium to produce massive amounts of power to be distributed to a reliable power grid. Their grids are fairly small and limited to major cities. What they really need are atomic energy systems that can replace diesel engines or gas turbines to provide local electrical power to cities and villages that are not tied together with power lines and that do not have reliable ground transportation networks for fossil fuels.

Designing systems to meet those needs with “commercial” nuclear fuel is extremely challenging, if not impossible. The critical mass required for the core increases the size of the reactor pressure vessels and puts their fabrication outside of the reach of small, indigenous manufacturers. If Iran wants to build relatively small power plants (say 5-50 MWe) in order to allow them to replace diesel generators or gas turbines, it makes perfect sense for them to investigate and develop ways to produce the necessary fuel. The enrichment required could still be less than the definition of HEU (less than 20% U-235) but it would still be 4-5 times as enriched as commerically available fuel. It is interesting to note that PBMR Co LTD of South Africa is planning to use fuel that has a significantly higher enrichment than commercial fuel, even though their plants are quite large (165 MWe) compared to the needs of small towns.

If Iran has these systems in mind or even under development, it would also make sense that they do not want to widely publicize that fact until they have a working product. Though energy production capability is an important political topic, we must never forget that it is also a source of enormous wealth and power – countries that think they have a new path to supplies may not want too many competitors too early in the game.