Chris’ note: An energy crisis is raging. It’s causing utility bills to skyrocket. It’s also one of the main drivers of record inflation. But it’s not all doom and gloom. As I’ve been showing you, like every crisis, this one brings opportunity.
Tomorrow at 8 p.m. ET, colleague Nomi Prins is hosting an emergency briefing. She’ll show you how the crisis will unfold… and how you can prepare. She will also lift the lid on a strategy she’s been working on with the potential to deliver 10x your money as the headlines worsen.
It’s free to attend. And it’s going to be an eye-opener. So make sure you’re signed up here. Then read on for more from Nomi on why an unloved sector will be one of the biggest winners as the crisis plays out.
To understand the energy crisis, you need to know what’s going on in Japan.
I often traveled there during my years as an investment banker. And I continued to go when I became an investigative journalist and author.
In 2016, I was invited to speak at the Tokyo Stock Exchange.
It was right after the election of President Trump. I spoke about the impact of his win on the economy.
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Nomi addressing the Tokyo Stock Exchange in 2016
So as an analyst, I’m always tuned in to what’s going on in Japan. And right now, the country is experiencing a massive energy crisis.
As you’ll see today, the way it’s solving it is another strong signal that nuclear power is making a comeback.
After the reactors at the Fukushima Daiichi nuclear power plant in northeastern Japan melted down in 2011, the government temporarily shut down all 17 of its nuclear power plants.
This cut off nearly 30% of the country’s electricity supply.
Japan has tried to replace its nuclear power with power from natural gas and coal. But since it took most of its nuclear fleet offline, it’s struggled to meet demand – especially when the weather is extremely hot or cold.
To curb demand, the Japanese government has urged people to turn off lights in unused rooms.
And in Tokyo, authorities are urging citizens to watch less TV… and switch off the heater on their toilet seats.
But winter is coming. This will bring greater demand for Japan’s already scarce supply of electricity.
So in August, Japan’s prime minister, Fumio Kishida, announced plans to restart some of the country’s idled nuclear power plants.
It’s hard to overestimate the effect of Russia’s war in Ukraine on his decision.
Japan burns natural gas for 39% of its electricity needs. And it imports 90% of that natural gas – in the form of liquid-natural gas (LNG). Nearly 10% of those imports are from Russia.
And Japanese-Russian relations aren’t great right now.
Japan has been critical of Vladimir Putin’s war. It’s also imposed unprecedented economic sanctions on the Russian economy.
And the Japanese know what happens to countries Vladimir Putin views as “unfriendly.”
In August, Russia cut gas supplies to Europe via the Nord Stream 1 pipeline indefinitely.
Now, it says there are maintenance issues with Nord Stream 2.
The twin pipelines run parallel to each other under the Baltic Sea in Europe. And they have a combined capacity of 110 billion cubic meters of natural gas a year.
That’s enough to supply about 26 million homes. And it’s going away…
So shoring up domestic energy supply has climbed Japan’s priority list.
Nuclear power is the only feasible way for the country to meet its energy security and carbon emissions goals.
But those aren’t the only advantages of nuclear over fossil fuels. Nuclear also makes better economic sense.
In 2020, fossil fuels accounted for 85% of Japan’s primary energy supply.
And that seemed fine.
Until earlier this year, coal and natural gas prices were relatively low. There was no immediate need for Japan to restart its reactors.
Then Russian tanks rolled into Ukraine… sending prices surging.
Coal is up 250% since the start of the war. And natural gas prices have risen by 83%.
That’s a problem for a country that imports 90% of its fuels to keep the lights on.
That’s what makes uranium so attractive as an energy source.
Fuel accounts for up to 80% of the operational cost of a fossil-fuel steam plant or gas turbine. Uranium costs account for about 20% of a typical nuclear plant’s operating expenses.
So Japan’s shift back to nuclear energy won’t just increase its energy security and help achieve its carbon goals. It will also bring utility bills down.
I know some readers will be nuclear skeptics.
A lot of folks have safety concerns over nuclear. And that’s understandable given the bad press that has surrounded it.
But the evidence over the past six decades shows it’s among the safest means of generating power.
A joint report from the European Union, the World Bank, and the Energy Information Administration, for instance, shows nuclear reactor sites are four times safer than wind farms… and 10 times safer than solar farms.
Yes, there have been some headline-grabbing – and admittedly scary – accidents. But the risk is overblown.
A way to get broad exposure to this trend is the Global X Uranium ETF (URA).
It holds shares in a basket of leading uranium explorers, miners, and refiners.
But if you want the best shot at protecting – and growing – your wealth as the energy crisis develops, I urge you to tune in to my briefing tomorrow night.
I’m bringing together everything I learned in my 15 years working on investment models on Wall Street to help you make extraordinary gains when big moves happen in the energy markets.
As a thank you for tuning in, I’m giving away a special report called The Dirty Dozen. It details 12 energy stocks to avoid at all costs.
So join me tomorrow by securing your spot here.
Until tomorrow,
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Nomi Prins
Editor, The Distortion Report