It’s been a while since my last ‘smoking gun’ report so it might be worth a brief reminder of what that categorization means. For Atomic Insights, the tag ‘smoking gun’ means a story that includes evidence of fossil fuel related interests working to oppose nuclear energy development, usually at a specific project. Some of the stories require reading between the lines written in order to see the evidence, others are easier to recognize.
Yesterday, a friend posted a link to a Bloomberg story with a headline that made the link between nuclear opposition and fossil fuel profits pretty clear – Japan’s Nuclear Exit Extending Record Profit for Golar: Freight. The story includes several juicy quotes indicating just how important it is for the LNG shipbuilding industry and the bankers/investors who back it to do everything they can think of to encourage more people to turn away from beneficial use of nuclear energy.
Just two of Japan’s 50 nuclear plants restarted since the earthquake and tsunami in March 2011, eliminating almost 30 percent of the country’s power supply. While global LNG output has never been higher, the tanker fleet has failed to keep pace, driving shipping rates to a record. With Japan now planning to phase out its reactors entirely, analysts anticipate rising profit for Golar, Monte Carlo-based GasLog Ltd. and Hoegh LNG Holdings Ltd. through at least 2015.
“This finalizes a long-term catalyst that we’ve already seen, but there was a question whether it would maintain itself,” said Michael Webber, an analyst at Wells Fargo Securities LLC in New York whose recommendations on the shares of shipping companies returned 18 percent in the past year. “A full-on shutdown makes it official that this is going to be additive to shipping demand.”
I took several courses in creative writing from one of my favorite professors at the US Naval Academy. He was an interesting character with a passion for good writing. I even did an independent study under his tutelage. One of things I remember most about Al Lefcowitz’s teaching, however, was his insistence that I work hard to avoid the passive voice. He explained that stories and novels where things “just happen” are not only boring, but they do not reflect real life. People take action and make decisions. He told me that people who believed things “just happen” had already taken a major step toward adopting the thinking pattern of a lazy bureaucrat seeking to avoid responsibility.
That training helps me to key into phrases like “a question whether it would sustain itself” when referring to actions governments decided to take in response to the natural disaster at Fukushima. Just in case there are any readers who have been sleeping for the past 18 months, ‘Fukushima’ is shorthand for an event where a powerful tsunami that killed 20,000 people and destroyed thousands of components of a settled infrastructure along more than 100 miles of coastal Japan also caused a loss of electrical power that resulted in melting the cores of three nuclear reactors.
The irrational response of Japan shutting down 50 undamaged reactors and Germany quickly announcing its plans to shut down its 17 large, safe, reliable, emission-free nuclear plants shows how a sustained campaign to market nuclear fear can cause people to either overlook or forget the fact that Fukushima did not cause a single radiation related injury more serious than a minor sunburn.
Here are a couple of other passages from the article that require just a small amount of filtering to arrange them in a way that more clearly supports my contention that fossil fuel promoters not only recognize the competitive threat that nuclear poses to their profits, but are also calling for others to take action to stoke the fires of excessive nuclear fear.
Global LNG production capacity will expand 2.8 percent to 255 million tons this year and another 4.7 percent in 2013, Morgan Stanley estimates. Output may reach 398 million tons in 2020, according to Fotis Giannakoulis, an analyst at the bank in New York. Japan will consume as much as 105 million tons in 2020, from 86 million tons now, Arctic Securities says. That’s as much as 15 million tons more than projected before the decision to phase out all nuclear power.
“The signal to the market is clear: ‘Prepare for Japan shifting to more fossil fuel in the near-term,”’ said Erik Nikolai Stavseth, an analyst at Arctic Securities in Oslo whose recommendations on shipping stocks returned 25 percent in the past year. “The increased volumes are clearly positive for LNG shipping and will require a significant amount of LNG vessels.”
“We can find many customers first of all in Japan, especially considering the recent events at the Fukushima NPP. Currently, Japan is one of the main importers of LNG accounting for more than 1/3 of all LNG trade.