The Energy Report: The uranium spot price balloon has lost air again and is back down in the mid-$30/pound (mid-$30/lb) range. It was stalled there for months last year. What pushed the spot price up in the first place? Why is it falling now?
Rob Chang: The uranium spot market is generally pretty thin, and any number of transactions on either the buy or sell side could push it in any direction. What's moved it higher recently could be the news of Japanese reactor restarts happening this summer. A couple of reactors are set to restart in the next few months or so, and we believe that helped push the price along a little bit.
But the spot price really depends on near-term utility demand. I think that's the key point here. In terms of utility demand, according to the numbers that we've seen, globally about 1520% of uranium requirements for 2016 onward are still uncovered. Between now and the end of 2016, there needs to be some buying, either in the spot market or through some other means, to cover those requirements. We saw a bit of a lift because of that need, but certainly there hasn't been a big rush back toward buying uranium ex-spot yet.
TER: I've heard repeatedly that the deficit is going to occur in 2019 or 2020. Why aren't the mining companies moving ahead to address the deficit they know is coming? Continue reading "Uranium Got You Down? Better Days Are Ahead"
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The Energy Report: Stephane, do you think the oil price has hit bottom and is now recovering?
Stephane Foucaud: When the Brent oil price was close to $50/barrel ($50/bbl), I think it was the bottom. It has recovered quite a bit. There is a risk that it might dip again, but I don't think we will reach the low $50s for quite some time. The reason I think there is a risk that the oil price could dip is that there has been an overreaction to the North American rig fleet reports, and particularly to what appears to be a large number of rigs being taken out of the market. Those rigs are, however, associated with lower-producing areas. Therefore, I think it's more sentiment than reality in terms of impact on the supply. The recovery has been too steep.
TER: What prices are you forecasting for 2015 and 2016?
Continue reading "How to Make Money in the Chaos of Oil and Gas"
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The Energy Report: Bob, in January you published an article saying that the drop in oil prices could be the "straw that pops the $7-trillion derivative bubble." Can you explain the influence of oil prices on derivatives?
Bob Moriarty: It's not the oil prices that are significant; it's the change in oil prices. If you own an oil field and it costs you $75 to produce a barrel, at $110 a barrel ($110/bbl), you're OK. If oil drops to $45/bbl, you're in serious trouble.
In the shale oil sector, producers were taking out hundreds of billions of dollars in loans to finance shale oil that was costing them about $110/bbl to produce. It looked good on paper, but was a disaster waiting to happen. A lot of people in the shale oil business will soon be going out of business.
"Pan Orient Energy Corp. just closed on the Thailand sale, and will be drilling a game-changing well in the next couple of weeks."
This could start World War III. The United States is the biggest oil producer in the world today, and Russia is number two. Russia's economy is based on oil priced at $110/bbl. They are very angry at the U.S. and Saudi Arabia for the games that have been played in oil. Oil at $45/bbl is not sustainable. It could bring down the world's financial system all by itself.
The real cost of energy today is $60 to $70/bbl. In the last piece I did with The Energy Report, I said $75 to $100/bbl oil was the new normal. That's still true. Oil is way below the cost of production, and that's going to hurt a lot of people.
TER: There is speculation the Saudis are doing this to wipe out some of the Russian and deepwater production. Could that be true? Continue reading "Low Oil Prices Are an Act of Economic Warfare"
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The Energy Report: You call yourself an "outsider," and have founded an investment club of that name. In what sense are you an outsider?
Nick Hodge: Being an outsider stems from my upbringing. Both my parents were middle to lower middle class, and I never had anything given to me. I've always had to work for what I have, starting with a lawn-service business when I was 12 and working my way through college as a butcher. I look at the "mainstream" with a skeptical eye. I'm a contrarian. I'm not on the inside of big business, big banking and politics, and don't want to be.
The Outsider Club has been around for about a year now. I founded it after writing for several newsletters over the past decade about energy and speculative investments.
TER: What does being an outsider mean with regard to your views on energy?
NH: I'll give two examples. First is my belief in the peak oil theory. Second is my early adoption of a belief in renewable technologies, such as solar and smart-grid technologies.
TER: It would be safe to say you're not an admirer of our financial elite? Continue reading "Want to Avoid Oil's Gloom? Turn to the Sun, Says Outsider Nick Hodge"
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The Energy Report: Your book, "The Colder War," is based on the idea that world domination will come through control of the energy economy, and that Russia is winning the fight. How is Russia using the petrodollar to achieve energy supremacy?
Marin Katusa: Under the leadership of President Vladimir Putin, Russia has reestablished itself as the alternative to the American superpower. Putin has aligned himself with nations like China to work in concert against U.S. interests globally. Furthermore, a new bank formed by the BRICS countries Brazil, Russia, India, China and South Africa will attempt to assert itself as an alternative to the International Monetary Fund.
The Colder War will be a long battle, just like the first Cold War, but in the Colder War, judgment day of the petrodollar will be the critical battle. One must understand global politics and the Colder War to be a successful investor in the energy sector.
TER: What is China's role in this struggle? Continue reading "Marin Katusa: Winter is Coming, How Investors Can Win in the 'Colder War'"
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