Academic journal article Global Economic Observer

Nuclear Power Plants and Uranium Prices

Academic journal article Global Economic Observer

Nuclear Power Plants and Uranium Prices

Article excerpt

1 Introduction

In 2015 the dynamics of supply and demand for industrial and precious metals were out of favor. The worst performer, with a decline in prices of about 40% is rhodium. The next two are nickel and iron ore, each down more than 30%. Tin, zinc, palladium, platinum and copper aren't far behind, each down more than 20%. Gold and silver were down about 5%. Uranium is one of the few commodities that hasn't gotten trounced. It's traded roughly flat over the past year. That's because, here, the supply-demand fundamentals have already begun to turn.

But here's the secret about commodities: They're elastic. As they get cheaper, demand increases and supplies shrink. It happens every time.

This chart shows how commodities have performed over the last 160 years.

As you can see, every sharp decline is followed by an equally dynamic rebound. Each boom and bust cycle lasts about seven or eight years. The down-cycle we're witnessing right now began back in 2010. So if the pattern holds we'll see another boom begin around 2017. That's not a given, of course. These cycles can be extended by overarching circumstances.

For instance, the boom cycle that began in 1933 was exacerbated by World War IF As a result, it lasted almost two decades. Similarly, the commodity price collapse that occurred from 1974 to the late 90s was exacerbated first by Fed Chairman Paul Volcker's war on inflation, and then the collapse of the Soviet Union.

These kinds of watershed events are atypical but they do happen. Still, it doesn't change the fact that the trend always reverses.

For instance, platinum and palladium are set for an annual deficit this year- 20.3 million tonnes for platinum and 13.3 million tonnes for palladium. Yet, these metals are at their lowest level in seven years. Copper and nickel will eventually come back into fashion, but not for a while. Silver is expected to double its present value of around 15$ per ounce in the next two years, but after a possible fall to 10$ per ounce.

There have only been two true eras of energy so far - the chemical and mechanical. Only recently have we started the transition to the third - the elemental.

The first two eras are marked by two tracts of knowledge. The first is chemistry, and the development and exploitation of fuel sources. The second is engineering, and harnessing potential through efficiency and transmission. In many regards, we haven't changed our ways since we started using wood fires for heat and light.

What we do to coal, natural gas, gasoline, and jet fuel is the same. We exploit the chemical structure of a fuel to break down molecules in an exothermic reaction.Then we use the heat however we can. The problem, to date, has been how much heat we end up losing in the process, or building something robust enough to contain the reaction.

If you have a fireplace, you aren't too far off from where we started when our ancestors learned how to bum wood. Only 10% of the heat released actually heats your house. The rest goes right up the chimney. With so much energy being lost, increasing the fuel supply is a terrible idea. The scaling at 10% efficiency is horrendous. A constant stream of incremental improvements resulted.

Using the same principles of mechanical force used for wind and water mills, engineers drove up efficiency by using turbines, coupled with closed steam pipe systems. The discovery of ideal fuel-to-air ratios led to efficient pistons that, when paired with camshafts, opened up even smaller engine designs that could be mounted on vehicles. Coolants and lubrication reduced friction and excess heat, allowing more efficient, higher RPM designs. Weight reductions from material changes drove down weight.

The dynamo transformed mechanical energy into a stream of electrons. Wires were thrown up worldwide to blanket the world in an electrical grid carrying power from chemical reactions. Even state-of-the-art batteries simply exploit unbalanced chemical reactions to generate a constant flow of electrons. …

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