With the nuclear-powered reactors in Japan still smoldering, it's not easy to know what to do. It is easier to pretend to know what to do or to take a blind stab. Or just to cash out. As easy as it was 25 years ago when Chernobyl exploded.
When that happened, the world panicked. All sorts of disaster scenarios existed, in part because of the amazing lack of information coming out of the Soviet Union and the radically escalated levels of radiation showing up in Sweden, which triggered the first word of the accident.
The lack of knowledge directly affected subsequent trading. Food and restaurant stocks were hit especially hard because people thought Chernobyl was uncontainable and no one would be able to eat anything but canned food until the radiation cloud dispersed. Yes, it was that scary.
This time around we know more about the event, but, again, because of radiation fears and the ongoing nature of the tragedy, snap judgments will be as wrong as they were back then. In 1986, I tried to keep calm, but my investors didn't and many went into cash.
But there was one thing we were certain of: The process of building a nuclear power plant would become so long and arduous that the fuel would be effectively finished.
That's what happened here in the U.S. The rest of the world, so energy-starved, kept building them. The older ones in our country, ones that were as vulnerable as Chernobyl, began to get decommissioned faster. The new ones were scrapped. They were very expensive to build anyway after the Three Mile Island debacle, and the fuel was never considered a serious source of energy again in America.
Instead we switched to coal and natural-gas power.
I think that if the current nuclear incident is contained, some people may say that the power plants held up even after a worst-case-scenario earthquake. I think that's a pipe dream even if nothing else occurs.
I see a wave of rebuilding, with natural gas being the preferred fuel. It's the fastest to build and the cheapest. I think if a country is tabula rasa, as Japan is now, it will opt for natural gas entirely because it is much cleaner than coal.
That means huge construction jobs with massive shipping requirements to Japan. It means materials and machinery will be in short supply and China's government-mandated slowdown will be countered.
To build plants, you need steel, concrete and, most importantly, aluminum and aluminum turbines. I suspect all of those commodities will jump in price, along with the iron ore and copper needed to create the steel and rebuild the electronic infrastructure.
This money will all be provided by Japan, so it will serve as a giant and quick stimulus to the world's infrastructure and infrastructure-related businesses. The most obvious players include Alcoa (AA), U.S. Steel (X), ArcelorMittal (MT), Vale (VALE), BHP Billiton (BHP) and Freeport-McMoRan (FCX).
That should be the case immediately today, although overall fears, a la Chernobyl, might initially put a damper on the market. That would cause these stocks to go down slightly with the rest of the market.
They are, however, the go-to names if the smoke clears and people believe the worst is over. If not, then I think they would be more late-day or second-day plays.
Tags:
"I see a wave of re-building with natural gas being the preferred fuel." (Yippeee!)
Question: Does Japan already have earthquake proof pipelines or would they not need them?
Thanks and I know it is a stupid question-
Don’t forget about those cracked solar panels.
You think they have wind mills in OZ?
Wouldn't need an earthquake, spring storms might be pretty hard on them, huh?
Looks like it's back to the drawing board for those Japanese folks...
Booya! PG!
So, does LNG have to have pipelines? Could individuals have storage tanks if Japan doesn't have pipelines in place? The above was a legitimate question.
The Wall Street Journal this morning (Wed., March 16) reports on the sale of LNG stored along the Gulf Coast. The product will be shipped to Japan. Apparently, the LNG has been there since before the shale discoveries and is a remnant from a time when it was thought the U.S. would be an importer of natural gas.
Does this LNG stored along the Gulf Coast contribute to the national gas storage figure that seems important to the price of natural gas? If so, will the sale of this gas dramatically alter that storage figure?
The Journal article notes the lack of U.S. capacity to liquefy natural gas. Perhaps that capacity will soon be increased. I still suspect that our national unwillingness to shift to natural gas has more to do with where corporations have huge sums of $$$$ invested and from where those corporations hope to make mega dollars than it does with anything else. After all, private companies can do it better than the government, right? These companies are running the country and the global economy. The irony of this should not be overlooked.
There would certainly be quicker returns on investments for individual private companies elsewhere in the near term than investing in CNG refuelling infrastructure at the moment.. And what single private company would have the resources to coordinate such a massive feat nationwide in a meaningful enough way to drive a massive move to Natural Gas as a competitive transportation alternative to gasoline..Perhaps private companies could form an investment club and pool their money, huh?
Could the government coordinate such and effort? Kind of hard to say! Right now they are too busy concentrating in investing taxpayer's Billions into High Speed Rail... That apparently is a much higher priority than investing in our nation's potential energy independence..
Shale drilling and lithium extraction are seemingly distinct activities, but there is a growing connection between the two as the world moves towards cleaner energy solutions. While shale drilling primarily targets…
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