10/25/10 Pittsburgh, Pennsylvania – William “Willie” Sutton (1901–1980) was a notorious American bank robber. According to FBI records, he stole over $2 million during a criminal career that spanned 40 years. To be sure, Sutton got caught on numerous occasions, and thus did he spend over half his adult life in prison.
But Willie Sutton was as intellectually honest as he was criminally dishonest. When a news reported asked Sutton, “Why do you rob banks?” Willie answered, “Because that’s where the money is.”
In his biography, Where the Money Was: The Memoirs of a Bank Robber, Willie Sutton expanded upon this perspective. He said, “Go where the money is… and go there often.” Similarly, as an investor, I pursue a similar philosophy: Go where the natural resources are…and go there often.
In a world with growing population, growing prosperity, increasing demand and decreasing availability of energy and mineral resources, there have to be great investment opportunities in these resources. Indeed, that’s where the money is. We should go there, and go there often.
In the energy sector, different fuel sources contain different amounts of energy per mass. That is, if you burn a block of wood, you’ll get a different amount of energy than if you burn a gallon of gasoline or diesel fuel or a pound of uranium. These differences influence the investment appeal of each fuel source.
The table below presents the energy density of various fuel sources in terms of megajoules of energy per kilogram. A megajoule — MJ — is 1 million joules, or approximately the kinetic energy of a 1-ton vehicle moving at 160 km/h (100 mph).
The point is to show that if something has a high energy density, then less physical material will release the same amount of energy. You can see why, for example, old wood-burning locomotives and steam engines gave way to coal-burning equipment. And the coal-burners eventually yielded to diesel engines. You just get more energy from the same volume of material, which matters when you’re in the confined spaces of a moving piece of equipment.
It’s obvious, based on the raw numbers, that uranium — and by extension nuclear power — can supply energy with a density that’s orders of magnitude more than what you get from carbon-based fuels. With numbers so utterly lopsided like these, the world is going to find it impossible to support massive populations and deal with resource and energy demand without a global nuclear power industry.
The long and short of it is that the world is going to move toward nuclear power. That’s why I have recommended investments in long-term uranium players like Cameco (CCJ: NYSE), and Denison Mines (DNN: AMEX), as well as direct investments in uranium via Uranium Participation Corp. (U: TSX).
What about alternative energy sources, you ask? What about solar and windmills, for example? Every energy method has its uses and attractions. But the energy density of solar and wind is quite low. Sure, solar and wind have a place in many niche energy applications, but not for meeting the looming energy demands of billions of people.
For the next 30 or 40 years, the alternative energy methods will move toward the 5–7% range of overall world energy supply. But for the “big power,” you need to keep focused on nuclear energy.
Regards,
Byron King,
for The Daily Reckoning
Byron King
Byron King is the managing editor of Outstanding Investments and Energy & Scarcity Investor. He is a Harvard-trained geologist who has traveled to every U.S. state and territory and six of the seven continents. He has conducted site visits to mineral deposits in 26 countries and deep-water oil fields in five oceans. This provides him with a unique perspective on the myriad of investment opportunities in energy and mineral exploration. He has been interviewed by dozens of major print and broadcast media outlets including The Financial Times, The Guardian, The Washington Post, MSN Money, MarketWatch, Fox Business News, and PBS Newshour.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
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What would be more useful for the evaluation would be a chart of comparative COSTS for obtaining and using the using the energy per MJ.
We should have 100 nukes under construction, now! Yucca mountain should be receiving waste from the hodge-podge of temporary storage facilities. The very real wealth expansion that occurred in the 80′s-90′s was driven by massive reduction in the cost of information. Semiconductors made it possible. In 2005 the $300B semiconductor industry drove leveraged wealth creation to $5T globally, 10% world GDP. Energy could provide the same kind of leveraged gains. If we drove the cost of energy down dramatically, it would reduce the cost of EVERYTHING! Even health care. If we were really serious about getting the US economy going again we would riding-herd on reducing the cost of energy
Alternative energy sources that are more available became quite popular in past years. The reason could be a relatively low cost to obtain that kind of energy. Because to produce nuke energy we need comparably a quite more investments is less extended. There is another option: Thorium. It is more widespread than Uranium in the Earth’s crust. But to use it we need even more investments (and governmental willingness) than it was invested into the nuke energy so far…
For the sake of a secure, healthy future I certainly hope Byron is wrong on this one. Nuclear power is too dangerous, too expensive, too limited, and creates the opportunity for large scale nuclear terrorism.
If uranium is so concentrated, how come we have to move the same tonnage of material (to mine the uranium) per kw-hr of electricity generated as we do coal? (Interestingly enough, a pound of silicon made into solar cells generates about the same amount of power as a pound of uranium, but without all the dangers.) If we build more nuke plants we reach “peak uranium” that much sooner. Fuel reprocessing is not the answer – the tons of plutonium involved make it impossible to detect a missing few pounds – all that is needed to make a bomb large enough to wipe out a major city. And has everyone forgotten the contamination at the Hanford, the near miss at Three Mile Island, the meltdown at Chernobyl? If it is safe, why can’t nuke plants get insurance – the US public has to shoulder the risk, instead. Ever notice that even your own business insurance does not cover losses due to any nuclear mishap?
Even if the plants were safe, what about the mining wastes, spent fuel rods, radioactive pipes, pumps, etc. We STILL don’t have a safe place to dump that all the tons of that stuff.
If nuclear power is so cheap, why is it supplying less power to our economy that wood, even after almost one Trillion dollars of our tax money spent on subsides?
Without a nuclear power industry it would be almost impossible to for “rogue nations” to build nuclear bombs, and even harder to do so without getting caught. The equipment is too specialized to be mistaken for anything else. If you think the current “police state” is bad, imagine what would be needed if nuclear power plants and reprocessing facilities were spread far and wide throughout the world. And that would still not make us safe.
Nuclear power is the worst of the 20th century energy technologies, followed closely by coal. The sooner we get to 100% local, renewable energy, the better for our health, our economy, and (especially) our security. As explained in the book “The Ecology of Commerce”, we can get most of the way there not by subsidies, but by making the prices of dirty energy reflect the costs.
same old scare tactics john.