In an icy wasteland near the ghost town of Pirpyat near the Ukranian border with Belarus, a concrete sarcophagus trussed up by scaffolding is all that remains of Chernobyl’s reactor No. 4.
Fukushima Daiichi in northern Japan is now certain to become the worst nuclear disaster since Chernobyl’s reactor No. 4 exploded nearly 25 years ago.
The threat of radiation in northern Japan has sparked new fears over the dangers that nuclear power poses to human health and to the environment.
In Germany, where I spend part of the year, there has been massive anti-nuclear protests. And this week Chancellor Angela Merkel ordered the temporary shutdown of 17 of the country’s reactors.
In China, too, nuclear fears are rising. China is the world’s leader in the construction of new nuclear power plants. It has 13 nuclear reactors and plans to build 25 more.
But China has announced it is suspending the construction of new nuclear power plants until it can strengthen safety standards.
It’s no wonder that uranium-linked stocks have plunged following last week’s earthquake. Cameco Corporation (NYSE:CCJ), the big blue-chip uranium producer, for instance, is down 32% from its recent high. And many junior uranium miners are down by closer to 50%.
Nuclear power produces about 16% of the world’s electricity. That’s not easy to replace. And the fresh concerns over nuclear power’s safety comes at a time when Libya’s civil war has cut the global supply of crude oil, which produces another 6% of the world’s electricity.
Right now, all eyes are fixed on events in northern Japan. But this isn’t the only world-moving event taking place.
As the brave workers at Fukushima Daiichi try to avert an even bigger release of radiation, Colonel Gaddafi’s forces are closing in on Libyan rebels and Sunni security forces have viciously cracked down on Shia protesters in Bahrain’s capital, Manama.
Given that there are significant Shia minorities in Saudi Arabia’s Eastern Province, where the giant 5 million-barrels-per-day Ghawar oilfield lies, such brutal crackdown (it left four dead) could be a total game changer if Shia anger and civil strife spreads.
This is an obvious problem.
The shutdown of 11 nuclear reactors in Japan has cut 10 gigawatts of power. This has forced Japan to import more fuel oil and light crude oil to make up for the outage – just as oil prices are rising on tensions in Libya and the Gulf of Arabia.
Which brings me to that buying opportunity…
The real winner in all of this will be natural gas. Natural gas already produces 22% of the world’s electricity needs. And it has three things going for it that make it an obvious “buy.”
1) It’s a clean (low-carbon) source of power
2) It is abundant
3) It is cheap
And one more thing… It doesn’t scare people the way nuclear power does.
As you can see from the chart below of the big natural gas ETF, the United States Natural Gas Fund LP (NYSE:UNG), the “spot price” for natural gas traded on the New York Mercantile Exchange, has been in a long, slow decline.
That trend is about to reverse, as the world’s nuclear power producing capabilities come under increased political pressure.
I don’t recommend you buy UNG. Because it mimics the spot price of natural gas by buying future contracts, UNG has proved to be an unreliable tracker of gas prices.
Instead, consider adding some exposure to the First Trust ISE Revere Natural Gas ETF (NYSE:FCG). This is a low-cost way of tracking natural gas explorers and producers.
Top names here include Chesapeake Energy Corp (NYSE:CHK), Devon Energy Corporation (NYSE:DVN) and Suncor Energy Inc. (NYSE:SU).
FCG is up 4.5% for the week. I believe there are much bigger gains to come.