The Red Queen Syndrome

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November 28, 2012 12:13 PM EST

By Richard (Rick) Mills
Ahead of the Herd

As a general rule, the most successful man in life is the man who has the best information

All through human evolution we have been harnessing increasingly effective forms of energy. From human power to horse power, to wood, coal, natural gas and uranium we've been working our way up the energy efficiency ladder. In reality what we've been doing is searching for the highest energy density to make energy production more efficient.

"The release of energy from splitting a uranium atom turns out to be 2 million times greater than breaking the carbon-hydrogen bond in coal, oil or wood. Compared to all the forms of energy ever employed by humanity, nuclear power is off the scale. Wind has less than 1/10th the energy density of wood, wood half the density of coal, and coal half the density of octane. Altogether they differ by a factor of about 50. Nuclear has 2 million times the energy density of gasoline." William Tucker, Understanding E=MC2

Ahead of the Herd recently interviewed Richard (Rick) Mills about the dark cloud of negative sentiment hanging over the nuclear power industry.....

Ahead of the Herd (AOTH): Japan's reactors are offline, Chinese demand has slowed considerably as well. German demand has evaporated and many miners are being forced to sell into the spot and mid term market. This selling has dropped the much watched spot price of uranium to US$40.00 lb.

RM: Japan's inventories are thought to be an overhang in the spot market as are German inventory sales. There's been very limited Chinese demand lately because of the country's revised nuclear new build schedule.

Buyers are sitting on the sidelines waiting for prices to come to them.

AOTH: The Chinese authorities took a timeout in regards to new nuclear builds to implement stringent safety standards in the wake of the Fukushima disaster.

RM: Yes they did. But China has recently released its new energy plan and it effectively ends the pause on new nuclear construction. Any reactors currently under construction will be allowed to continue but new reactors will be required to use third-generation technology, the EPR or AP1000.

This is a major industry catalyst as it paves the way to commence building a lot of reactors very soon. Currently China has 12.57 GW in operation with 26 GW under construction. The Chinese government had previously stated that its goal was establish 40GW of nuclear power capacity by 2015 and to reach 80 GW by 2020.

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