The strange bacteria Geobacter metallireducens, as its name might suggest, has a unique quality where it can latch on to metal and convert the inorganic material to the food it requires to survive. Geobacter is particularly fond of uranium, capable of consuming the metal to the point where its body has 300 times the concentration of uranium as the soil around it.
Rather than dying a terrible death by radiation poisoning, this bacteria survives and thrives because of the radioactive metal. While humans cannot eat uranium, we too have found tremendous use harnessing this radioactive compound to create energy with far less pollution than fossil fuels, and have changed our entire society to build around this complex process.
Or at least, that was the narrative of nuclear power around a decade ago, when the memories of Chernobyl and Five-Mile Island had largely faded and the boogeyman of climate change encouraged the transition to nuclear power. Then the commodity bubble hit its greatest extent, uranium traded for $130 per pound, a tsunami destroyed Japan’s Fukushima reactors, and nuclear power appears on the point of near-collapse.
For the first time in history, shutdowns of nuclear reactors are outnumbering startups. Natural gas, not content with devastating the coal industry, has become both cheap and clean to the point that it can compete with nuclear power on both fronts.
As the United States produces nearly as much natural gas as the next two nations (Russia and Iran) combined, more and more investors are questioning the value of building nuclear power plants given the abundance of risks and the relative scarcity of benefits.
No company has felt this collapse more acutely than Westinghouse Electric, one of the greatest success stories in all of American innovation. The electrical plug powering your computer or charging your phone as you read this article is a relic of their ingenuity, over 100 years in the making.
Westinghouse was the first company in the world to capitalize on alternating electrical current, spreading the fantastic invention of sockets across the globe to power everything from lamps to blenders to supercomputers. Westinghouse helped to pioneer nuclear power throughout the 20th century, building water reactors that would spread across the United States.
Eisenhower’s Atoms for Peace program would spread Westinghouse’s influence even further, to our international allies who agreed to give up nuclear arms ambitions in order to get cheap power.
But, for better or for worse, we no longer live in the 20th century, and today it increasingly looks like Westinghouse has backed the wrong horse. The company filed for Chapter 11 in March, claiming that — prepare to be surprised — excessive regulation kept them competing with cheaper electrical producers.
Morgan Stanley estimated that it would cost Westinghouse twice as much money to meet their contractual demands to build power plant reactors in Georgia and South Carolina as originally estimated.
It would be nice to say that the good news is that Trump is in the White House and energy regulations are dropping like flies. But for Westinghouse, and the nuclear industry writ large, silver linings aren’t coming easily, or cheaply.
The rollback of Obama’s War on Coal policies does little to help beleaguered nuclear tech companies, which have their own miles of red tape about dumping, water usage, worker safety, and a host of other costly concerns.
What’s more, Trump’s team is focusing on the symptoms rather than the disease after rumors exploded that Chinese investors might seek to acquire Westinghouse despite their mountains of debt and obligations. The nuclear power industry employs some 100,000 Americans in jobs ranging from physicists to uranium miners.
Energy secretary Rick Perry has discussed the possibilities for preventing a foreign firm from taking over Westinghouse. Keeping Westinghouse in American hands, however, requires an American buyer willing to take on the company’s expenses and spend billions more again to put them into the black. Understandably, few American power firms have sprung forward to put that weight on their shoulders.
Investors have a difficult choice on their plates. If nuclear power is only in a lull similar to that of the late 1980s, it will push production down and increase the value of uranium, representing a fantastic value buy. But if nuclear power is past its half-life, investors who pick up on the competition will have much more to smile about.
Regards,
Ethan Warrick
Editor
Wealth Authority
