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11 Comments

  1. As a pure money play, NG is the best bet right now for investors. This sucks for us, but it is the unfortunate truth. Gas has key government personnel in thrall, and at the moment gas-fired generating stations are cheaper and quicker to build, and less polluting than coal.
    I know the arguments against using it, particularly in the European market, unfortunately until there is run of disasters, or the Russians get too heavy-handed on the valves, gas will be seen as the ideal compromise by politicians.
    Until then, look to most financial publications telling their readership that gas is a good investment.

  2. @DV82XL –
    Until then, look to most financial publications telling their readership that gas is a good investment.
    I guess that follows similar logic to them telling people that .coms were good investments in 1999 or that mortgage bonds were good investments in 2007.
    The price of gas is very closely tied to the balance between supply and demand. One of the huge ironies is that if I am right and nuclear energy is developed with due haste, the people who predict endless supplies of cheap gas will also be right. As nuclear energy takes market share from gas, gas prices will be significantly lower than they would have been without a growth in nuclear energy.
    If we do not develop nuclear energy, I foresee some rather dramatic price increases in gas that will make those “cheap” plants seem quite expensive as they are run only when absolutely required. (Friends of mine were buying barely used natural gas fired turbines a few years ago for 20-30% of the original purchase price. At $10 – $13 per million BTU, the owners could not afford to run them.)

    1. No question, on a smaller scale I saw the same thing happen when there were subsidies offered to get people off oil for heating, up here in Eastern Canada, and seeing the cost of gas go through the roof when the market was saturated.
      As for investment advice, it seems that the short-term is the only thing that is being considered these days, but that’s not just an issue in the energy sector, is it? One of the biggest problems we have is trying to make people see that we have to start building nuclear now if we want to head off a very bad future, and we are trying to do so in a culture that has become so myopic, that 18 months from now, might as well be the next century, as far as the market is concerned.

    2. Here is a link to an article about Southern Company’s Vogtle project economics – a consultant has declared that the plant will not be as competitive as expected when the project first started. His reason for this conclusion is the drop in natural gas prices since 2006 and his expectation that gas prices will remain low for the foreseeable future.
      http://www.ajc.com/business/new-reactors-under-budget-561241.html
      I am not sure how anyone can look at the history of natural gas prices and expect them to be well behaved, but I guess it is always possible to use the last few months as your anchor point and expect that the future will look just like the very recent past.

  3. The tragic thing is that natural gas gives oil companies a foot in the door of electricity generation. If big oil has its way, the coming wave of electric cars will get their energy from the same oil fields that gasoline comes from.

  4. Natural gas makes sense at first glance. Plants are easy to build and operate. You don’t need very many high paid staff. People have natural gas in their homes, and that gives it perceived familiarity. A plant like Vogtle which will operate for decades does not fit the easy, get rich quick ideology.

  5. Sorry to be a broken record, but I believe the nuclear renaissance will be led by Asia. The supply chains are being set up there. They are committed. They will drive costs down and the ‘duh’ moment will arrive when the rest of the world follows. There will be progress in the US/Europe, but slower than it seemed it would be a few years back. It’s too bad — hopefully it won’t be a disaster.

    1. @SteveK9 – no need to apologize for repetition. If nothing changes I agree that the renaissance will be led by Asia. They have done a great job doing what they have proven that they do very well – adapt ideas originally generated elsewhere and improve upon them.
      My expectation is that Americans will also do what we have proven that we do reasonably well – make good technical choices and use innovative problem solving techniques once we have exhausted all other possibilities. My prediction is that the expansion of smaller, factory built nuclear energy facilities will be led by North Americans.

  6. Actually there is a lot of Big Oil disinformation around NG.
    First when leakage is cosidered NG actually is worst that coal at producing GHG
    http://www.greenleft.org.au/node/44113\
    Secondly there is a good chance that NG cost will double and triple.
    http://www.theglobeandmail.com/globe-investor/e-zines/globe-investor-magazine/building-a-case-for-natural-gas/article1624925/
    Finally Rod you need to stop overstating the cost of American nuclear. Here is the latest from South Carolina for AP-1000 at Summer 2 and 3.
    $4.5B/Gw
    http://www.scana.com/en/investor-relations/nuclear-financial-information/default.htm

    1. @seth – Just curious – where and when have I overstated the cost of American nuclear? (I generally offer a wide spread of cost estimates – until we have actually completed a new plant, all we have are estimates. Unfortunately, the cost of any not yet completed project of any kind has the potential for significant escalation due to unforeseen circumstances and external meddling.)

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