On September 22, 2011, Karen Roche and JT Long of The Energy Report interviewed renowned speculator and financial author Doug Casey on his views about uranium. Read here why Doug thinks despite the recent bad press, “yellowcake” has a bright future.
The Western world’s skittishness, skepticism and staunch opposition when in comes to nuclear energy won’t stand in the way of its production elsewhere in the world. It will be full steam ahead in China, India and other developing nations, says Casey Research Chairman Doug Casey, and the Western world is tiny in comparison. In fact, “I’d say uranium is a great place to be for at least the next generation,” he tells us in this Energy Report exclusive. With ever-advancing technology enabling economic recovery in places where it previously wasn’t possible, he’s also optimistic about natural gas and oil.
The Energy Report: Next month, at the sold-out Casey Research/Sprott Inc. “When Money Dies” summit in Phoenix, you’re on tap for a presentation entitled “The Greater Depression Is Now.” Your colleague, Marin Katusa, is on the roster too, talking about “Making Money in Energy.” Marin recently told us there’s a buying opportunity for uranium companies. Given Fukushima’s repercussions in terms of the nuclear energy industry, are you bullish on uranium?
Doug Casey: Absolutely. It’s unquestionably the safest, cheapest and cleanest form of mass power generation. That’s not to say that there aren’t problems, as the Fukushima incident made clear. As much of a disaster as that was—a combination of earthquake, tsunami and radiation leakage—so far it’s just been a big industrial disaster. I daresay that if government hadn’t been so involved in nuclear power these last 50 or 60 years, the technology would have been much further along. Nuclear power would be much safer, cheaper and cleaner than it is today. We might, for instance, be using thorium, which appears to be better than uranium in many ways. We would almost certainly have much smaller, cheaper, and robust reactors.
So, yes, I’m a huge uranium bull. If you want mass power, you need nuclear power. And today that means uranium. I’d say uranium is a great place to be for at least the next generation.
TER: But considering the fact that governments remain involved and people are even more squeamish about nuclear power post-Fukushima, won’t we see a stall in nuclear power and development?
DC: That’s possible. But, the hysteria is mainly going to affect the Western world. China and India recognize they have no alternative to nuclear power. As you know, the growth is in China, India and other emerging economies; it’s where the most of the world’s people live. The Western world is small by comparison, and getting smaller. These other places will continue full steam ahead with nuclear.
TER: Porter Stansberry, whom you know well, recently told us to expect the U.S. to become a net exporter of natural gas in the not-too-distant future. Do you see that as well?
DC: Quite likely. Let’s talk about peak oil first, though. I think that the Hubbert peak theory is accurate, and for good geological reasons—but understand that peak oil doesn’t mean we’re running out of oil. Rather, it means that we’re running out of easily available, cheap light sweet oil. And we are.
However, technology is always improving, enabling economic recovery of oil and natural gas in places where it previously wasn’t possible. Horizontal drilling and the fracking process have opened up gigantic reserves of gas, scores of trillion of cubic feet in some basins in the U.S. So, yes the U.S. could become a huge exporter of natural gas. It’s entirely possible. It could happen in other regions of the world as well, but probably not with gas at its current prices.
The gas is available, but because it’s very underpriced relative to other forms of energy, it probably won’t be produced until the price doubles or even triples from where it is now. That would bring it more into historical alignment with oil prices, which I expect will themselves go higher as well.
TER: How is it that the oil prices have remained relatively high and gas is still so low? Given the differential of the two price points, why aren’t we seeing a conversion from oil-dependent cars, for instance, to natural gas?
DC: Oil has much a greater density of energy than natural gas, and a much more convenient energy-based fuel, so of course we’ve all gravitated toward it. It’s not really feasible for aircraft, for instance, to be able to run on natural gas, so they’ll continue to use oil-based derivatives. In addition, gas is much harder to transport than oil. So it’s tended to be a local market, whereas oil is international.
But since most all the easy, cheap oil’s been found—mostly in the 60s and 70s—and those old oilfields are going into decline, gas is probably the next thing. Gas has some advantages as well. For one thing, it burns cleaner. Remember that these fuels, these petrochemicals, basically contain just hydrogen, oxygen and carbon. As technology advances, we should be able to manipulate these very simple and well-understood molecules and put them into a form we want. We’ll be able to do it ourselves in various ways as nanotechnology, for instance, develops further in the future. Then maybe we won’t have to rely on nature doing it for us over billions of years.
TER: Despite criticism of the effects of government involvement—stifling nuclear energy advancement over the years, as you mentioned earlier, or printing money to paper over enormous amounts of debt, as you’ve pointed out in other interviews—you’ve indicated that improving technology is a countervailing trend that actually will increase the standard of living.
DC: Exactly. There are more scientists and engineers alive today than have lived in all previous history put together; that’s a huge cause for optimism. Technology is very likely to solve many, many problems—as long as the scientists and the free market are allowed to develop these things, and as long as there’s capital available to manufacture the tools they need to do so.
TER: What are you hoping attendees come away with from next month’s summit?
DC: People come to these conferences is to get ideas about intelligent places to put their capital. Today those places are harder to find than has ever been the case before in my lifetime. With the dollar’s imminent demise, staying in cash is also very dangerous. There are very few bargains to be found in the world of investment today. Stocks today are quite overpriced by almost any parameter. Bonds will implode; that’s especially serious because they’re a much bigger market than shares. Property prices are still headed down. So people are looking for answers, and I think we have some.
Beyond answers along those lines, we also host these summits to discuss some investment principles so that our attendees don’t have to rely on us for answers. They’ll be equipped to deal with these things on their own.
TER: What are some things that investors can do to protect themselves?
