Tag: Marin Katusa

The Colder War and the End of the Petrodollar

By Marin Katusa, Chief Energy Investment Strategist

The mainstream media are falling over themselves talking about Russia’s just-signed “Holy Grail” gas deal with China, which is expected to be worth more than $400 billion. But here’s what I think the real news is… and nobody’s talking about it—until now, that is.

China’s President Xi Jinping has publicly stated that it’s time for a new model of security, not just for China, but for all of Asia. This new model of security, otherwise known as “the new UN,” will include Russia and Iran, but not the United States or the EU-28.

This monumental gas deal with China does so much more for Russia than the Western media are reporting. First off, it opens up Russian oil and gas supplies to all of Asia.

It’s no coincidence that Russian President Putin announced the gas deal with China at a time when the tensions with the West over Ukraine were growing. Putin has US President Obama exactly where he wants him, and it’s only going to get worse for Europe and America.

But before I explain why that is, let’s put this deal in terms we can understand. The specific details have not been announced, but my sources tell me that the contract will bring in over US$10 billion a year of revenue to start with. The 30-year deal states that every year, the Russians will deliver 1.3 trillion cubic feet (TCF) of gas to China. The total capital expenditure to build the pipeline and all other infrastructure for the project will be more than $22 billion—this will be one of the largest projects in the world.

You can bet the Russians won’t take payment in US dollars for their gas. This is the beginning of the end for the petrodollar.

The Chinese and Russians are working together against the Americans, and there are many countries that would be happy to join them in dethroning the US dollar as the world’s reserve currency. This historic gas deal between Russia and China is very bad news for the petrodollar.

Through this one deal, the Russians will provide about 25% of China’s current natural gas demand. In a word, this is huge.

It’s also not a coincidence that Putin sealed the deal with China before the Australian, US, and Canadian liquefied natural gas (LNG) terminals are completed. If you read our recent Casey Energy Report issue on LNG, you know to be wary of the hype about LNG’s “bright future.” Take note: this deal is a serious negative for the global LNG projects.

I also stated in our April 2012 newsletter:

Putin has positioned Russia to play an increasingly dominant role in the global gas scene with two general strategies: first, by building new pipelines to avoid transiting troublesome countries and to develop Russia’s ability to sell gas to Asia, and second, by jumping into the liquefied natural gas (LNG) scene with new facilities in the Far East.

Pretty bang on for a comment that was made over two years ago in print, don’t you think?

So, what’s next? Lots.

Putin will continue to outsmart Obama. (Note to all Americans: the Russians make fun of you—not just for your poor choice of presidents, but also for your failed foreign policy that has led to most of the world hating America. But I digress.)

You will see Russia announce a major nuclear deal with Iran, where the Russians will build, finance, and supply the uranium for many nuclear reactors. The Russians will do the same for China, and then Syria.

With China signing the natural gas deal with Russia and the president of China publicly stating that it’s time to create a new security model for the Asian nations that includes Russia and Iran, it’s clear China has chosen Russia over the US.

We are now in the early stages of the Colder War.

The European Union will be the first victim. The EU is completely dependent on Russia for its oil and natural gas imports—over one-third of the EU-28’s supply of oil and natural gas comes from Russia.

I’ve been writing for years about this, and I’m watching it come true right now: the only way out for the EU countries is to use modern North American technology to revitalize their old proven oil and gas deposits. I call it the European Energy Renaissance, and there’s a fortune to be made from it.

Our Casey Energy Report portfolio has already been doing quite well from investing in the European Energy Renaissance, but this is only the beginning. If Europe is to survive the Colder War, it has no choice but to develop its own natural resources. There are naysayers who claim that Europe cannot and will not do that, for many reasons. I say rubbish.

Of course, to make money from this European dilemma, it’s imperative to only invest in the best management teams, operating in those countries with the political will to do what it takes to survive… but if you do, you could make a fortune. Doug Casey and I plan on doing so, and so should you.

For example, two weeks ago in this missive, I discussed “The Most Anticipated Oil Well of 2014,” where if you invested, in just two weeks you could be up over 40%. Not only did I write in great detail about the company, I even interviewed the CEO because of the serious potential this high-risk junior holds.

I said in that Dispatch that the quality of the recorded interview wasn’t first class, but the quality of information was. The company just put together a very high-quality, professional video showing its potential, and I include it here for all to watch.

Since my write-up, the company has announced incredible news. It’s only months away now from knowing whether or not it has made a world-class discovery. Subscribers to the Casey Energy Report are already sitting on some good, short-term profits with this story, but it keeps getting better.

The more the tension is building in Ukraine (and it’s going to get worse), the more money we’re going to make from the Colder War. There’s nothing you can do about the current geopolitical situation, but you can position yourself and your family to benefit financially from the European Energy Renaissance.

Now You Can Take the Lead… We Make It Simple

We expect great things from this company and other companies that are exposed to the European Energy Renaissance. You can read our ongoing guidance on this and our other top energy stocks every month in the Casey Energy Report. In the current issue, for example, you’ll find an in-depth report on the coal sector, uranium, and updates on all of our portfolio companies that are poised to benefit most from the European Energy Renaissance.

There’s no risk in trying it: If you don’t like the Casey Energy Report or don’t make any money within your first three months, just cancel within that time for a full, prompt refund. Even if you miss the cutoff, you can cancel anytime for a prorated refund on the unused part of your subscription. You don’t have to travel 300+ days a year to discover the best energy investments in the world—we do it for you. Click here to get started.

Seven Things You May Not Know About Coal

By Marin Katusa, Chief Energy Investment Strategist

The days of tossing another lump on the fire to keep warm are behind most of us, but coal is still vital to keep our modern computers, air conditioners, and even cars humming. How much do you know about one of the world’s most indispensable commodities?

#1. Before turning into coal, layers of ancient swamp bed transition through another familiar carbon compound in as little as 9,000 years. That’s peat.

In the right conditions, high pressures and temperatures below Earth’s crust can turn organic material from ages-old swampy sediments into coal. But before that happens, the material passes through an intermediate stage that the Irish made famous. Peat is coal in the making, and as most everyone knows, it burns too. (For connoisseurs among us of the single malt, peat also helps give Islay scotches their distinctive flavor.)

There are also different kinds of coal itself. They vary in their content of water, carbon, and other ingredients, and in the time it takes to fashion them as well. The hardest coal, called anthracite, requires on the order of millions of years to form. That’s a long way from peat.

#2. A single percentage-point improvement in the efficiency of a coal-fired power plant results in a 2-3% reduction in CO₂emissions.

Facilities that convert coal into power currently generate 41% of the world’s electricity, according to the World Coal Association. At about 43%, the United States rates about average. But the world’s second-largest economy, China, depends on coal for 81% of its electricity; and with nearly as many people, India depends on coal for 68%. A few countries rely almost completely on burning coal to make power—South Africa (94%) and Poland (86%), for example.

Small surprise, then, that a lot of research has been devoted to reducing the carbon emissions and other pollutants that result from combusting coal. Once it’s mined, washing it to remove impurities can reduce ash by more than 50%, while also removing much of the sulfur that causes acid rain. Grinding lumps into powder makes the coal burn more efficiently as well as quickly. In smokestack exhaust, filters capture soot and more ash, and scrubbers capture mercury and more sulfur.

We’ve come a long way from Victorian London and its noxious yellow fog. But there are strong incentives to keep at it. The return on improvements is still significant, as you can see above.

Furthermore, coal’s vital role in power generation is likely to be around for a long time yet—most predictions even set it as increasing slightly in the next few decades. With all the talk about natural gas and alternative energies, coal still provides the always-on, baseload type of power that’s so hard to replace.

#3. Unlike many commodities, the prices we refer to for coal come directly from negotiations between producers and consumers.

In the oil sector, you’ll see prices quoted that benchmarks like West Texas Intermediate or Brent Sea Crude are bringing on the market. You may see a spot price and a contract price for uranium.

However, coal prices aren’t standardized like that. Instead, they’re set by whatever bargain a producer can drive with a consumer (or the other way around, for that matter).

To track the coal market, there are a few key negotiations we watch. For metallurgical coal, the most important contract price is that between Australian producers and Japanese steelmakers. There’s a much larger array of contracts for thermal coal—the kind power companies use to generate electricity—but most observers keep their eyes on Indonesian export prices.

#4. The world’s fastest-growing coal importer is… China? Nope: India.

This is a great example of tricky wording that’s possible with statistics. China and Japan both import more coal than India, and China’s rankings at the top tier of coal consumption and overall growth put it in the driver’s seat of increased global demand. But the world’s fastest-growing coal importer is India.

Just look at the last couple of years. From 2011 to 2012, India increased its production from 585 to 595 million tons (Mt)—but at the same time, it had to increase imports from 105 to 160 Mt in order to meet domestic demand. India has been on that track for several years now, and it isn’t expected to get off anytime soon.

The reason why is widespread inefficiency. New coal projects face delays in regulatory approval—and once they do get approval, they face challenges that range from resettlement to opposition based on environmental concerns. Then there’s inefficiency in moving coal where it needs to go around the country. By some estimates, half of coal transports are affected by rail capacity that isn’t implemented properly.

The result: power companies have to import coal just to make sure they can keep the lights on.

#5. The number of Indonesian billionaires has almost tripled since 2010 to 29.

Australia was the world’s largest coal exporter for a long time. It’s been overtaken by Indonesia, however, first in thermal-coal exports and now in total exports. The land above the Land Down Under exported 52% of the world’s coal in 2012, the latest year for which global figures are available.

Indeed, Indonesia has huge reserves of thermal coal, totaling 4.5 billion tons at the end of 2013. Plus, the country has one major advantage over Australia: location. It’s almost half the distance from the largest coal importers—China, India, South Korea, and Taiwan. And with friendlier regulatory hoops to jump through, Indonesian companies have been able to build basic infrastructure, such as conveyor belts, railways, and ports, more easily and quickly.

What do all these delightful facts have to do with billionaires in Indonesia? Most owe their wealth either directly or indirectly to commodities. The coal sector has created a marked change in Indonesia’s wealth, a nation of 247 million relatively poor people. A retail boom started taking off even as the rest of the world reeled from the 2008 economic crisis; segments of its real-estate market rose 30% just in the last year.

This may be a difficult trend to keep up, though. China is considering legislation to ban the import of coal with a caloric content (a measure of energy it contains) below 3,900 kilocalories per kilogram. This is the kind of coal typically burned in low-tech, “dirty” power plants—and the kind that most often comes to China from Indonesia. In contrast, most thermal coal from Australia, North America, and Russia rates above the 3,900 kcal/kg floor.

#6. The long-term picture sees the world needing an additional 500 million tons of metallurgical coal annually by 2030—a 200% increase from today.

Again, China is a major driver. In 2012 China’s steelmaking industry consumed 581 million tons of metallurgical coal (AKA “met” coal and coking coal), an increase of 8% in a single year even as signs emerged that its economy was slowing. China had to import 71 tons of it.

China is far from alone, however. Brazil has been busy building major infrastructure, stadiums, and housing in preparation for the 2014 World Cup and the 2016 Summer Olympics. Japan has plenty of rebuilding to do, and consumption of met coal is rising in India along with its needs for thermal coal. And let’s not forget South Korea: Home to the world’s second-largest shipbuilding industry, it consumes the most met coal on a per-capita basis on the planet.

In the face of all this demand, supply is markedly constrained. Only five countries in the world export significant amounts of metallurgical coal: Australia, Canada, the United States, Russia, and Indonesia. The global recession forced several producers to shelve plans to expand mines, and good, new discoveries are few and far between.

#7. It’s not just floods in Australia—labor issues and looming higher taxes on coal are putting pressure on coal prices as well.

The 2010 floods that inundated coal mines, washed out railroads, and shut down port facilities in Australia may have been news to the rest of the world, but Australians know they’re not that uncommon. It doesn’t take much to disrupt supply of a commodity that’s in high demand.

Expect labor issues to nag the industry as well. For example, thousands in Turkey have gone on strike to protest unsafe working conditions after an explosion in a coal mine killed more than 300 miners in mid-May. Australia’s top coal transporter Aurizon Holdings Ltd. is seeking to end more than a dozen union agreements after a year of negotiations with workers have fallen through. These are just a couple of examples.

Then there are the taxes that will only increase on the world’s two largest suppliers of coal.

Increased demand and tightening supply… sounds like a situation we investors like to get in on.

Take the Lead… We Make It Simple

On Thursday, May 22, we’ll publish the brand-new monthly issue of the Casey Energy Report, and most of it is about coal. We haven’t recommended coal companies in a while, but the sector looks so promising now that you’d waste an opportunity for great profits if you didn’t get in now. Our coal company pick for this month is a good-size coal producer with very limited downside and excellent upside potential.

You can find out all about it by giving the Casey Energy Report a try. It comes with a free one-year subscription to our Casey Energy Dividends newsletter (a $79 value), and you risk nothing by test driving it. If you don’t like it or don’t make any money within your first three months, just cancel within that time for a full, prompt refund. Even if you miss the cutoff, you can cancel anytime for a prorated refund on the unused part of your subscription. Click here to get started.

You don’t have to travel 300+ days a year to discover the best energy investments in the world—we do it for you.

Obama’s Secret Pipeline

By Marin Katusa, Chief Energy Investment Strategist

Isn’t it odd that an 800-mile pipeline that runs across environmentally sensitive land has been permitted without any mention in the media? Not a word about it from President Obama either.

Obama’s Secret Pipeline will be built over land that’s much more sensitive than that of the Keystone XL pipeline, which gets nothing but front-page coverage. It will actually be 17% (six inches) larger in diameter than Keystone XL (36 inches) and it will transport natural gas, not oil.

Bill 138

The Senate of Alaska, the state in which the pipeline will be built, has just passed Bill 138, which makes the state a partner of three of the world’s largest oil companies, including one that has a horrible environmental track record on US soil. In a nutshell, Alaska’s government is now partners with BP, ExxonMobil, and ConocoPhillips.

Only one more signature is required—Governor Sean Parnell’s—and it’s expected that he will sign the deal.

Not Even the US Government Wants US Dollars

For more than 100 years, the US government has been receiving a royalty and tax revenue paid on the amount of oil or natural gas produced on American soil—a fee that is paid in US dollars. Bill 138 has changed this forever.

Instead of Alaska receiving its dues in US dollars, the state legislature has decreed through Bill 138 that the state will be paid “in kind.” In other words, the state will be getting its share of royalty and tax revenue in natural gas instead of US dollars.

For the record, this is the first time ever that a US state has entered into a partnership like this. Essentially, Alaska is now a 25% equity partner with BP, ExxonMobil, and ConocoPhillips—which also requires the state to cough up cold, hard cash to build the entire project, including the 800-mile-long, 42-inch-wide pipeline.

Overall, the project is currently estimated to cost north of US$50 billion, and we expect that when all the capital expense overruns and government inefficiencies are accounted for, the whole project will come in at more than US$75 billion, using the total costs of similar projects for comparison.

But it will be 2015 before the final negotiations and the specific details of the partnership are agreed on, and remember, the devil is in the details. Who do you think will get the better end of the deal—a bunch of government bureaucrats with zero oil and gas experience, or the world’s top oil- and gas-producing companies? I know whom I’m betting on.

Which leads us to the point of this weekly missive.

And the Winner of Obama’s Secret Pipeline Is…

We already know which company will be building and operating Obama’s Secret Pipeline. The company I’m talking about has a lower price-to-earnings (P/E) ratio and a better yield than all of its peers. That’s good, because shareholders get paid a monthly yield for owning the stock while sitting back and watching the share price rise as well.

The Ultimate Oil Toll Booth

Think of it this way: this company charges the world’s most powerful oil and gas producers for every barrel of oil that passes through its “road network,” and now it can also charge the state of Alaska. Regardless of the price of oil or natural gas, this company gets its fee.

It’s a low-risk way to benefit from a high-risk enterprise. This company is a current Buy in our Casey Energy Dividends portfolio. The Energy team is currently working hard on the upcoming issue, which will in detail cover the company that’s bound to gain big from Obama’s Secret Pipeline.

I know you haven’t heard about this pipeline yet, but you will soon enough.

That’s what we do here at the Energy Division of Casey Research: We’re the first to uncover breakthrough stories, and the first to uncover the best energy investment opportunities in the world. Doug Casey and I just got back from a whirlwind European tour, where we visited many of Europe’s most promising energy projects.

Here’s a picture of Doug Casey and me at Europe’s largest onshore drill site. This drill rig is 15 stories high and uses about 16,000 liters of diesel a day to turn the drills—which Doug and I are holding in this picture. As a side note, just the crank shaft that we’re holding costs US$2 million—this rig is expensive and gigantic.

For you to get a better perspective on the true size of Europe’s largest onshore drill rig, here is a picture of Doug Casey and me with our friends Frank Holmes, Frank Giustra, and Matt Smith.

(From far left to right: Frank Holmes, Doug Casey, Marin Katusa, Frank Giustra, Matt Smith)

Do Your Portfolio a Favor and Try Out the Casey Energy Report

Doug Casey and I have done all the hard work for you. The current issue of the Casey Energy Report is a compilation of our Europe trip, including in-depth descriptions of our site visits and a new recommendation with a hugely promising project in an out-of-the-way European country that we personally checked out. The company is backed by mining giant Frank Giustra, and you bet he knows what he’s doing.

The Casey Energy Report comes with a free one-year subscription to Casey Energy Dividends (a $79 value), including, of course, the upcoming May issue with our “Obama’s Secret Pipeline” pick.

There’s no risk in trying it: You have 90 days to find out if it’s right for you—love it or cancel for a full refund. You don’t have to travel 300+ days a year (as we do) to discover the best energy investments in the world—we do it for you.

If you don’t like the Casey Energy Report or don’t make any money within your first three months, just cancel within that time for a full, prompt refund. Even if you miss the cutoff, you can cancel anytime for a prorated refund on the unused part of your subscription. Click here to get started.

99 Problems… But Oil Ain’t One of Them

By Marin Katusa, Chief Energy Investment Strategist

America has some serious problems.

Despite the fact that the United States spends $15,171 per student—more than any other country in the world—American students consistently trail their foreign counterparts, ranking 23^rd in science and 31^st in math.

The US also spends more than twice as much on health care per capita than the average developed country, yet underperforms most of the developed world in infant mortality and life expectancy. The US rate of premature births, for example, resembles that of sub-Saharan Africa, rather than a First World country. And if you think Obamacare is going to change that… I have a bridge to sell you.

K Street has a bigger influence on American politics now than Main Street, and economic key players like the TBTF banks, the insurance industry, etc., have nearly carte blanche to act in whichever way they see fit, with no negative consequences.

The US government is spending more money to spy on Americans and foreigners than ever before. Since August 2011, the NSA has recorded 1.8 billion phone calls per day (!)—with the goal of creating a metadata repository capable of taking in 20 billion “record events” daily.

More than one in seven Americans are on the Supplemental Nutrition Assistance Program (SNAP)—better known as “food stamps.”

The list goes on and on.

But there is one problem that America doesn’t have—getting oil out of the ground.

After decades of declining domestic production, US producers finally figured out how to extract oil from difficult locations, whether that’s the shale formations or deposits under thousands of feet of water… and they’ve kept going ever since.

Today, the US is one of the few countries in the world that have seen double-digit growth in oil production over the past five years.

This presents some great investment opportunities for the discerning investor.

The oil industry’s new treasure trove, the legendary Bakken formation, has turned formerly sleepy North Dakota into one of the hottest places in the United States. According to the Minneapolis Fed, “the Bakken oil boom is five times larger than the oil boom in the 1980s.”

Unemployment in the state with 2.7% is the lowest in the nation; in Dickinson, ND, even the local McDonald’s offers a $300 signing bonus to new hires, on top of an hourly wage of $15.

Here are some more fun facts, courtesy of the Fiscal Times:

• There are now an estimated 40,856 oil industry jobs in North Dakota, plus an additional 18,000 jobs supporting the industry. Between 2010 and 2012, Williston, ND, a town with a population of only 16,000, produced 14,000 new jobs.

• While other US states are struggling, some even being close to bankruptcy, North Dakota now has a billion-dollar budget surplus.

• The number of ND taxpayers reporting income of more than $1 million nearly tripled between 2005 and 2011—and that in a state with a total population of 700,000.

• The low population numbers will soon be a thing of the past, though: the population in the oil-producing region is expected to climb over 50% in the next 20 years.

• 2,000-3,000 new housing units are built every year in Williston, ND, but it’s still not enough to fill the need. Rents have gone from a pre-boom $350 per month for a two-bedroom apartment to over $2,000 today… the equivalent of a studio apartment in New York’s rich Upper East Side.

The entire “energy map” of the United States has been altered by the Bakken: the Midwest, rather than the Gulf, is now the go-to area.

And who profits the most? The pipeline companies that can quickly adapt to this new situation and the refinery companies that can use this readily available domestic oil.

Though the rest of the world is trying to catch up, the United States has a huge head start over everyone else. The advancements it holds in hydraulic fracturing and horizontal drilling had been built on the back of one and a half centuries of oil and gas exploration and the thousands of firms that service the drillers and producers.

So far, other countries simply lack the experience and the infrastructure to even compete.

In fact, American companies have spent 50% more money on energy research and development (R&D) than companies anywhere else in the world. What’s more, they are exporting this technology across the globe, enabling other countries to unlock their own hydrocarbon reserves.

Obviously, they’re not doing this out of philanthropy; there is a lot of money to be made by licensing out their technology and “lending a helping hand.”

The biggest winners, hands down, are the energy-service companies that already know how to get oil out of US fields… and that apply these methods to other fields worldwide to boost production and reduce decline rates.

As the easy-to-extract oil depletes in the US and abroad, oil companies and governments are beginning to look at past-producing oil fields. As it turns out, the producing wells drilled in the 1970s and ’80s weren’t very good at getting every drop of oil out of the ground. With modern technology, however, it is now possible to access previously out-of-reach deposits. Even a mere 5% or 10% improvement in oil recovery rates means billions, if not trillions, more in revenues.

Rediscovering previously overlooked fields was what started the boom in the Bakken as well as the Eagle Ford formations… and other countries are beginning to catch on.

We believe that this new trend of applying new technologies to old oil fields is not a fad but here to stay. That’s why our energy portfolios are stocked with companies doing just that in Europe, Oceania, and even South America.

As it’s becoming clear that the era of cheap, light, sweet crude is nearing its end, the industry is adapting to this new reality of oil becoming more difficult to access. And if investors want to make profits in today’s energy markets, they, too, must learn to adapt.

Read our 2014 Energy Forecast for more details on what’s hot and what’s not in this year’s energy markets. This free special report tells you about the 3 sectors we are most bullish on for this year, and which sectors to avoid in 2014. Read it now.

We Love You, Mr. President!

By Marin Katusa, Chief Energy Investment Strategist

With Valentine’s Day coming up fast and furious, I wanted to take a moment to give heartfelt thanks to one of my personal heroes this year—the man who single-handedly destroyed US national security and will give smart uranium investors a lot to be grateful for in the coming months. This letter is addressed to him.

Dear President Obama (may I call you Barry?),

I’m writing this letter to you in sincere appreciation and heartfelt gratitude for your achievements regarding national security and the uranium sector.

Perhaps you wonder what on earth national security could have to do with uranium (unless it is used in those pesky nuclear weapons that you keep taking away from the mullahs).

In fact, I bet you do wonder, because apparently it never occurred to you that one could depend on a ready supply of the other.

But let’s take this one step at a time.

I know you’re used to receiving information on the state of the union from your slew of sycophantic advisors in the form of tidbits and sound bites, so I’ll try not to overwhelm your fragile cerebrum.

Please take a look at the facts listed below, and maybe, just maybe, it’ll begin to dawn on you…

7 Facts You Should Know About Uranium in America

Amount of electricity in the United States generated by nuclear power: 20%.

Number of homes in President Obama’s America that are powered by the Russians: 1 in 10.

Number of homes in President Kennedy’s America that were powered by the Russians: 0.

Percentage of imported uranium in President Obama’s America: over 90%.

Percentage of imported uranium in President Kennedy’s America: 0%.

In 1962, the US was the largest producer of uranium in the world.

In 2013, the US ranked #8 in uranium production, right after China.

But let’s not stop there. To fully understand in what way national security and uranium might be linked (except that they both share some of the same vowels and consonants), I need to insert a brief…

History of the DOE

Believe it or not, but it was good old Albert Einstein who was the catalyst for the creation of what’s known as the US Department of Energy (DOE) today. In 1939, seeing that the Germans had an alarming head start in the nuclear race, Einstein wrote a letter to your predecessor Franklin D. Roosevelt, alerting him to that fact.

We know the rest from the textbooks: In 1939, Germany invaded Poland… in 1941, Japan bombed Pearl Harbor… and within two months, in 1942, Roosevelt instructed the Army Corps of Engineers to build a nuclear bomb—the start of the Manhattan Project. The US dropped two nuclear bombs on Japan, and in August of 1945, Japan surrendered.

The beginning of the Cold War led to the creation of the DOE.

In 1946, the US presented a plan for international control of nuclear research at the United Nations summit. The Soviet Union completely rejected the American proposal, launching the race for the nuclear bomb between the two superpowers.

After World War II, the Manhattan Project was turned over to the Atomic Energy Commission, which by the late 1940s had invested hundreds of billions of dollars into expanding the weapons complex.

By 1973, OPEC caused chaos at the pumps for Americans, and President Nixon announced an energy plan of independence for the US by 1980 (the first of many announced by subsequent presidents; I wonder why they never worked out).

Nixon created the Federal Energy Administration, and in 1974, his successor, Gerald Ford, signed the Federal Energy Reorganization Act. Like most political promises, the program failed to deliver, and by the late 1970s, Jimmy Carter was facing high oil prices and low approval ratings.

President Carter created the Department of Energy, and nine days before Elvis Presley died of a heart attack, James Schlesinger was sworn in as the first secretary of energy.

I know, Barry, you’ve been impatiently shifting around in your seat, waiting for the punchline. Okay, now this is where you come in…

President Obama Makes Changes to the DOE

Perhaps you know that since its inception, the Department of Energy has been the largest holder of uranium in the world. The DOE’s mandate for uranium was a strategic one, and the essential goal—as an issue of national security—was for the US and its citizens to never become dependent on another nation for uranium.

All the DOE had to do was follow two simple rules for sales to the US utilities that required uranium to power American households. Here they are:

1. Never sell more than 10% of domestic demand into the market per year.

2. Never sell uranium at such a low price that it would sabotage domestic uranium production.

Enter you, Mr. President, Barack Obama. You rode your campaign horse to victory on slogans like “Yes we can” and “It’s about time. It’s about change.”

Unfortunately, you forgot to mention that rather than change American politics, you were about to short-change the American people.

Why, oh why couldn’t you just leave well enough alone? Every US president before you had obeyed those two rules I mentioned above—Republican or Democrat, from Truman to Kennedy to even George W. Bush.

In mid-2013, you, Barry, apparently not understanding the importance of national energy security, changed the law and dropped the two rules. (We’ve been writing about this for a while now, so thanks for providing us with editorial material too.)

Since your advisors obviously did such a dismal job explaining it to you, maybe we can help.

How You Destroyed the US Uranium Sector—and US National Security

You see, the DOE built up its strategic stockpile of uranium from domestic production to make sure that the nuclear power generation that is so vital for the United States’ supply of electricity was never at risk. (The US is the world’s largest consumer of uranium and makes up about 25% of the global demand.)

All the presidents before you, Barry, followed the two sacred rules because the Russians, due to their Soviet legacy assets, can produce uranium at much lower prices than the Americans. Therefore, it is crucial to keep domestic production economic and competitive.

However, your recent job numbers didn’t look so good, did they—so you decided to milk the nuclear sector in order to create jobs and raise $250 million for the reclamation of old nuclear sites.

(You never openly stated this, but we found out anyway. It was easy, you see—to figure out your agenda, all we had to do was work backwards through the nuclear chain and look at the companies the DOE approved for the clean-up jobs, because these companies have announced their work programs for the next few years. Nice try there, Mr. President.)

So to get your $250 million—do we still count in millions, by the way? I thought everything under a billion was viewed as chump change these days—you made the DOE sell significantly more uranium into the market than ever before in the history of the United States.

And of course your timing couldn’t have been worse. Namely, you decided to do this right after the Japanese started selling record amounts of uranium after the Fukushima incident, and the wave of uranium hitting the market dropped the spot price from over US$72/lb to US$34/lb… a more than 50% drop within 24 months.

Well, you got what you wanted: with the spot price slashed in half, 95% of all US uranium production is now uneconomic. That means the miners are losing money and the higher-cost producers will soon go bankrupt.

Thanks to your tireless efforts, the former “Land of the Free” is now a junkie dependent on Russian uranium supplies for its next fix. And the nice Mr. Putin, whose country was America’s sworn enemy not too long ago (remember that?), now essentially controls 10% of the entire US electricity matrix.

Which proves again that with friends like you, Barry, one can make do quite easily without enemies.

So why exactly am I writing you a thank-you letter?

Well, as a community organizer, you wouldn’t know such things, but you see, the cure for low prices is low prices.

Less uranium production = less supply = higher price. So thanks to you, the shares of first-class uranium explorers and producers now really have nowhere to go but up. Well done!

You may have endangered the welfare of your entire nation for the foreseeable future, but from an investor’s viewpoint, you deserve a ton of chocolate truffles. Because you have single-handedly created—oh, just the…

Greatest Investment Opportunity in Uranium EVER

So, thank you, dear Mr. President, because your loss is my gain.

Oh, come on now, no need to hide your face in shame. After all, this is not the first time government stupidity has set up an incredible opportunity to make a fortune—you’re in very good company.

Thanks to your stunning incompetence, I wouldn’t be surprised if you handed me and my Casey Energy Report subscribers a double or triple on our investments.

So I close my letter with the warmest wishes for the rest of your presidency. May you never change.

Yours in deep gratitude,

Marin Katusa

Now to you, dear readers: If you want to find out the true extent of the windfall my dearest friend, Mr. Obama, has so kindly provided for us, you should give the Casey Energy Report a try today.

The current issue is all about the latest and greatest opportunities in uranium investing, and in our article “Making the Grade,” we’ll take you to the richest uranium deposit in the world and tell you all about the company that’s in the best position to be successful there.

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