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Gold/Mining/Energy : Uranium Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Land Shark who wrote (6242)	1/4/2007 6:48:16 PM
From: russet	Read Replies (1) \| Respond to of 30230

American, European and Asian manufacturing capacity has been relocated to China's extremely cheap educated labor force hence China's need for more and more power generation. If American consumption drops (25% of total world consumption), what will happen to factories in China producing all the crap for American consumers, along with concomitant requirements for Chinese electrical generation capacity? I defer to Cameco's projections of demand vs supply. They are not predicting long periods of excess demand over supply. They see mine production rising to meet increased demand in a few years. Current demand does not exceed supply from mines plus destocking of stockpiles. There is still a lot of stockpiled supply ignoring what is being hoarded by instruments like the Uranium participation fund. There may be a temporary demand supply problem in a few years depending on what happens at Cigar Lake,...then again there may be no demand supply imbalance because of the new mine capacity coming on as we type that Cameco did not expect last year and is not expecting in their current estimates. This is more a matter of how much you are prepared to pay per lb to lock in supply over the next few years, than a shortage of physical supply in future years. A few players have all the supply and will sell to the highest bidder for future locked in supply. Things look good now, but in 6 months with good news from Cigar Lake and from Australia, the whole situation could turn around on its head. You don't need to believe me, talk to the experts at Cameco. They don't share the current view of some that Uranium demand will definitely exceed supply currently, in the near term, or in the long term. Their words are "short term periods of excess demand over supply may occur". I assume you aren't discounting short term drops in oil prices. As for the longer term,....what is the longer term and what rate of inflation shall we use? Let's say in ten years (which is pretty long term for any of the gamblers on these SI threads) more efficient extraction techniques and efficiencies bring oil sand production expenses down to $10 per barrel in todays dollars with a 3% inflation assumption. Given Suncor's costs are in the mid teens and dropping, and other oil sands producers have dropped their cash costs below $10 it would be imprudent to suggest they couldn't do it. Conventional production is still cheap for many oil giants,...Exxon total average costs per barrel are $7 and the Saudi's costs are said to be lower still. Necessity is the mother of invention. High costs are the remedy for,....high costs. Many governments may bring in legislation that tips the balance in favor of electric cars,...what would happen to oil prices then? Remember most cars would be charged in off peak hours not necessarily demanding an increase in base electrical generating capacity. Given a large percentage of each oil barrel goes to transportation, any shift in demand on gasoline or diesel fueled transportation would have huge effects on demand for oil and hence its price. And then there's the building code changes demanding more insulation, more energy efficient appliances, fluorescent and LED lighting, more efficient electronics etc. All will exert negative effects on the price of oil over the next decade. Who knows what effects will win out year to year. If every person in the U.S. bought an energy efficient compact car instead of a big SUV or pickup truck,...what would the price of oil be now? What are the current trends in sales of cars vs trucks in the U.S.? Many may not think the uranium price is dependent on oil and gas prices. I think they are. The cost of an oil or gas fired turbine is a small fraction of the cost of a complete nuclear facility which includes mining, milling, production of fuel rods, reactor and turbines and finally spent fuel storage and reprocessing facilities. They are quick and easy to build and can be located even on downtown streets without a big NIMBY outcry. Nothing is forever.