Storms mainly cause panic. It is the landfall which causes death and destruction. Using Steering Current Predictors, sea surface temperatures, a 52-year statistical hindcast, North Atlantic and Arctic Oscillations and other parameters, Dr. Gray forecast in his recent report, “The odds of a major hurricane making landfall along the East Coast are more than twice the climatological average value this year.” He forecast a 38-percent probability of a major hurricane hitting land along the Gulf Coast this year.

The most chilling comparisons made in the “Extended Range Forecast of Hurricane Activity for 2006” were those which went unremarked by the media. Dr. Gray compared Hurricane Season 2006 to hurricane seasons in 1961 and 2004. Hurricane Carla in 1961 was ranked 3rd worst by barometric pressure at landfall of all hurricanes entering the Gulf Coast. The 2004 hurricane season brought Charley, Frances, Ivan and Jeanne, which were some of the most devastating U.S. hurricanes recorded. Such scenarios would wreak havoc with already strained energy prices, but would be good for the uranium mining bulls. Gray concluded, “We believe that 2006 will be a very active season in the Atlantic basin.” The more active, the more likely a dramatic spike in uranium pricing.

NUCLEAR EXPANSION: A WORLDWIDE PHENOMENON

Yuri Sokolov, Department Head of Nuclear Energy for the United Nation’s International Atomic Energy Agency (IAEA), told reporters this past week, “There is plenty of uranium assuming the industry keeps moving ahead with exploration and new mines.” Sokolov is confident the “identified resources” of 4.7 million metric tons can be mined for less than $60/pound. That’s about 26 percent higher than the current spot price. There was also a warning buried in his speech. He cautioned the major risk to uranium supplies would come from possible delays in moving from discovery to production. Industry insiders understand it can take between 12 and 20 years after a discovery to reach the production stage. U.S. utilities may get more aggressive to secure supplies as this year and next pass by. Their supply deficit for 2008 through 2012 requires a near miracle to match demand requirements.

Sokolov also set targets in the IAEA’s annual Red Book. Depending upon how quickly the nuclear industry expands, more uranium will be required. By 2025, if global nuclear capacity increases to 22 percent, utilities will need 80,000 metric tons per year. An increase to 43 percent would require 100,000 metric tons annually. The Red Book forecast new mines, over the next five years, would add about 30,000 metric tons to the supply inventories. This new capacity would fill the current uranium supply shortage, unless of course the industry is hit with delays. More new mines would also need to come online to keep pace with the heralded nuclear renaissance. Only the most cynical industry insiders would disagree the uranium mining sector desperately needs a dramatic surge in production between 2010 and 2020 to match the explosive growth ahead for this sector.

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