Uranium’s Latent Demand
By Roger England, GM for www.uraniumstrategies.com
July 23rd, 2008
Economists typically define Latent Demand by measure of a market’s inability to meet its demand in an efficient manner. This unfulfilled demand is called Latent Demand. Many variables can influence this measurement, as with Uranium, politics play a large part. The first half of 2008 has certainly offered subtle glimpses into how the political landscape is changing, and hence, shaping Uranium’s current Latent Demand and its future price prospects.
Within the United States, California, its most populous State, has shown a change in heart towards the use of Nuclear Energy. A recent survey by Field Research Corp, during early July 2008, suggested 50% of Californians would agree to more Reactors being built within the State, as compared to 41% who disagreed. These statistics compare remarkably with a similar survey conducted a decade prior which suggested only 38% agreed whilst 55% disagreed. Moreover, there are rumblings within California’s State Legislature to lift the current moratorium on nuclear power plant construction, as the 1975 law seems out of step with current alternate energy prices and its environmental effects.
Federally, the Republican Presidential candidate Mr. John McCain suggested at least 45 new reactors, as compared to the 33 currently being planned, would need to be online by 2030. Although his counterpart Mr. Barack Obama seems less supportive of the numbers, it seems he has a tacit understanding of this need.
In Europe, Germany has a mandate to decommission all of its nuclear power plants by 2021. A poll conducted, by the German public TV station ARD, in early July 2008 contrasted sharply with a similar poll conducted only 7 months prior, showing a 12% decline in support of the decommissioning. Again, alternate energy prices and their effects upon the environment has moved this phasing-out effort into one of a hot political topic, especially as they near elections within 2009. As a small indicator of the changing political will, Germany’s historically defining anti-Nuclear Green Party has seen, recently, a member jumping ship citing differences with the party’s uncompromising position towards the decommissioning.
A short step towards the U.K., Prime Minister Brown envisions a “post-oil economy” by declaring no limits to the numbers of future nuclear power plants within the Kingdom. A Government White paper released in early 2008 contrasted sharply with one commissioned only a few years earlier in 2003, by describing “nuclear power as safe, low carbon, affordable and dependable”, as compared to an “unattractive option” which closed the doors on any new power plant development to replace any decommissioned plants.
Moving towards the supply side of the equation and the land down under, Western Australia’s State Labour Party has a hard line against uranium exploration. However in early July 2008, Canada’s Cameco Corp. and Japans Mitsubishi Development announced plans to purchase, for half a billion dollars, Rio Tinto’s Kintyre uranium deposit; perhaps on the bet the Labour Party will not win the next election, or it will in fact soften its negative stance towards uranium exploration in light of environment and economic concerns.
The rising energy demands of the developing world has taken a good portion of consideration towards descriptions and explanations of uranium’s future demand and its rising price, yet not much consideration is ventured towards its more latent aspects, as found within the changing political landscapes of the developed world.
As the above mentioned examples may indicate, the current tally of the world’s future nuclear power plant start ups is most likely understated, and as a result, perhaps analysts such as UBS’s long term uranium price projection of $US50.00 per pound, post 2016, a little underestimated as well.