The prevailing wisdom has been that oil supplies are ample in places like Saudi Arabia and Kuwait. The kings and princes who run those countries just wanted to hold back shipments to keep prices high. That thinking is changing. The IEA “is preparing a sharp downward revision of its oil-supply forecast,” according to The Wall Street Journal. By way of turning modest hope into hopelessness, the analysis also points out that big oil producing countries are spending much less on exploration.

The thought that oil could move closer to $200 may not be so misguided.

Dirty energy is coming back into vogue. According to The New York Times, “in Japan (coal) production has jumped to its highest in nearly four decades.”

In Beijing there are days when the sun is barely visible. Smog hangs over the city, most of it from coal and wood burned for heat and energy. The Chinese central government has tried to clean some of that up for the Olympics. It has not worked entirely. A number of athletes won’t be showing up for the games. They claim the air quality it too poor. But, China drags on oil like an old man does on a cigarette. What does not kill him makes him stronger.

The US has an abundance of coal. Mining is becoming more profitable as oil prices rise and demand for anthracite soars. A little pollution could go a long way to cut dependence on oil.

The 1986 problems at Chernobyl put the West off nuclear energy. Having citizens who glow in the dark did not seem worth having cheap and abundant energy. The US does not build nuclear plants anymore. When oil hits $150, the sentiment about that may change. The government may even look at granting incentives to energy companies who want to put a carrier-class plants next to a big cities.

Energy alternatives which seemed unimaginable just months ago are starting to look like beauty queens. Solar and ethanol will not be able to replace oil, at least not for years. With uranium and coal, it is a different matter.

Douglas A. McIntyre

But the second problem is earnings and future expenses.  The U.S. uranium enrichment company disclosed that its plan to build the second uranium enrichment facility on Piketown, Ohio to supply fuel to nuclear energy reactors could run about 50% over budget. It is starting to sound like a familiar reason: pricing pressure on labor, commodities, and construction materials like steel and aluminum is rising much higher than anticipated. 

Early last year it forecast a $2.3 Billion cost, but now it is forecast at $3.5 Billion. USEC is trying to take steps to transfer the American Centrifuge technology to strategic suppliers to build the machines and the balance of plant infrastructure.

Shares were up 3.9% to $9.25 today, but shares are down some 19% at $7.50 today in after-hours trading and the 52-week trading range is $6.95 to $25.65.

• Last week Business Week went too speculative on one of these uranium stocks.
• Recently, McDermott realigned its nuclear operations.
• Entergy is spinning off its operations in nuclear.
• It looks like media pumped nuclear all up at the top.

Jon C. Ogg
February 25, 2008

it also calims operational management is comprised of uranium mining and exploration professionals with experience in the uranium mining industry gives the company ongoing uranium mine-finding and uranium mine development expertise.  Here is the management team data from the site.

Just yesterday it gave its fifth update this year of its progress at its Goliad Project in South Texas:  Since acquiring the Goliad project, the Company has drilled over 360 holes and completed extensive sampling, mapping and reporting by experienced independent and internal technical staff in generating a number of studies for permitting applications.  The Company plans to develop an in-situ uranium recovery facility, following the completion of further resource definition and engineering studies, that must meet the stringent review and analysis of the Texas Commission on Environmental Quality (TCEQ) for air, water, and radiation emissions before permits and licenses are granted.  In-situ recovery is a mining process developed in South Texas over the past 30 years. The process is well understood and has been applied successfully at other South Texas mining projects.

Here is the full SEC site data that will give a much in depth example and backgrounder for the financials and operations.  We recently covered how the media was increasing coverage of nuclear energy and we focused much of the sector and gave some other links as well.
As Media Touts Nuclear Energy, Time To Review Nuclear & Uranium Stocks
Cameco: Playing Pinocchio or Pangloss
NYMEX Trading Uranium Futures
Uranium Stocks Went Bonkers on Rising Uranium Prices

Jon C. Ogg
September 28, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the Special Situation Investing Newsletter and does not own securities in the companies he covers.

Let’s assume for a moment that we forget about the discussions leading to delays that have been perpetual.  Let’s for get about the political side of nuclear power.  Lets forget about killing land under mountains where we’ll bury the stuff in Nevada.  And let’s forget about the potential environmental catastrophe that can result if something goes horribly wrong.

There are many stock plays in the U.S. alone that will be huge beneficiaries of this if even one nuclear power plant approval goes through.  If there is one, why not the full dozen of them.  Here is the lot of companies:

Shaw Group (NYSE:SGR) is perhaps the most vertical of the engineering and construction firms.  Fluor (NYSE:FLR) is also in there.  And we can’t leave out the monster General Electric (NYSE:GE) for new reactors, nuclear fuel, reactor services and performance services.

Cameco (NYSE:CCJ) out of Canada is THE go-to behemoth in the stock market for Uranium miners and producers.  The much smaller company in the US is USEC (NYSE:USU), although its shares were hit exceptionally hard Friday after testing started.  Some more smaller and much more speculative stocks in the sector are Uranium Resources, Inc. (NASDAQ:URRE), U.S. Energy Corp. (NASDAQ:USEG), Uranerz Energy Corp (AMEX:URZ), and even Canyon Resources Corporation (AMEX:CAU).  Mosaic (NYSE:MOS) and CF Industries (NYSE:CF) are stealth plays in the sector that can enrich uranium from phosphate, but you should know that prices have to be very high and have to be expected to remain very high for quite some time for those to be cost effective.

The Economist recent magazine cover also flaunted a comeback for nuclear power.It said America’s nuclear industry is about to embark on its biggestexpansion in more than a generation. This will influence energy policyin the rest of the world.  CNET today discussed the wave of coming applications for more nuclear power plantsthat are coming. Personally, I’m a believer in this.  No greenhousegases, no pollution, no icky air around the place.  But the dark sideis not Three Mile Island.  That was nothing.  The dark side isChernobyl and a vast area of land that won’t be habitable forgenerations and generations.  The other thing that might act as apossible lid on investors reviewing nuclear power stocks this timearound is that local gas prices for your car are far lower than earlier this year when energy prices were rising but not as high as the $80.00 seen this week.

No wonder Merrill Lynch got creditfor what seemed to be overly bullish analysis that ended up lookinglike they had a crystal ball for a few months.  They gave a huge safetynet for uranium prices. The Canadian National Post also gave some buyout picks in the sector based on Raymond James analysis.

Nuclear power plants are coming online more and more in China andIndia, and Japan and France are largely dependent upon the glowinggreen juice to power those nations.  Russia is showing it is expandingnuclear power use again and South Korea is expanding its program.  Noneof us in the Western hemisphere are going to be too excited about this,but the chances that we are going to have to deal with a nuclear-usingIran is getting larger instead of smaller.

Back in August an ETF was launched as the Market Vectors Nuclear EnergyETF that launched on the American Stock Exchange under the "NLR" ticker, but only a portion of these stocks in here are US-based and many names wont be familiar.  Here is the full list of the company stocks in the ETF.

Jon C. Ogg
September 14, 2007

Jon C. Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. Special Situation Investing Newsletter and does not own securities in the companies he covers.