Exponential Stock Investor

SPECIAL ISSUE

May 2022

The Australian Solution to Europe’s Energy Crisis

By Ryan Clarkson-Ledward 

49 years ago, the world suffered its first modern energy crisis...

In the post-war era of globalisation and open trade, oil had become a key asset. 

This vital commodity was not only imperative for vehicles on roads, but also countless homes and industries across the US, Europe, and Australia. 

So as the Western economies boomed, demand for oil skyrocketed. 

By October 1973, though, in the wake of the Yom Kippur War, the situation changed... 

Several members of OPEC (known as OAPEC at the time), which played a key part in this war, felt slighted by the West’s decision to help arm their enemy: Israel. 

In response, OPEC put an embargo on its oil exports. 

The result was truly spectacular in its effectiveness. 

Not since the Great Depression had the world economy experienced such a violent shock — a powerful display of the West’s dependence on Middle Eastern oil…and just how fragile energy markets could become. 

Energy security became a very real problem... 

Under the sly leadership of Nixon, the US was fortunate to avoid total disaster. 

They managed to negotiate terms between both the OPEC members and Israel. 

Under these agreements, the price of oil still rose sharply, but at least the US secured a steady supply. 

Europe, in comparison, was not quite as lucky. 

The sudden recession that gripped most of the eurozone brought a swift end to the postwar boom. 

Key industries such as textiles, shipbuilding, and steel production all felt the brunt of this energy crisis. 

Following that came the many bankruptcies and unemployment. 

More bizarrely, even the routine of everyday life was disrupted. 

Take this excerpt from the Financial Times about the trials faced by those in 1970s Britain, for instance:

From January 1974, factories and businesses were limited to three days of electricity, either Monday to Wednesday or Thursday to Saturday, while shops, unless essential, were limited to either mornings or afternoons.

Street lighting had already been cut by half, offices ordered to keep temperatures below 63F (17C), floodlights for sport outlawed and television broadcasts cut off at 10.30pm on weekdays.

The energy crisis had forced the nation into a reality that was akin to wartime rationing. 

Life in Europe looked as though it was heading back to the Dark Ages...literally. 

And so, the Western world — but especially Europe — needed a new answer.

They needed a new energy solution

The irony is that a lot of the long-term pain resulting from the oil crisis could have been avoided. 

Industries, businesses, and households shouldn't have had to suffer as much as they did. 

After all, oil wasn’t the only available energy source at the time. 

Coal was the leading source of electricity prior to the oil boom. Even biomass or hydrogen were potential alternatives for some. 

France, though, was one of the first nations to pursue a different avenue. 

Rather than look to the past for inspiration, they chose to look to the future... 

Nuclear power would save France from its energy needs. 

It was all part of French Prime Minister Pierre Messmer’s grand plan. 

The ambitious program set out to free the nation from any external supplier of energy material. Instead, the government would invest heavily in reactors that would secure their needs for decades to come. 

And today, with hindsight on our side, it has proven to be a political and economic masterstroke. 

France is now the largest exporter of energy across the whole of Europe — handing off terawatts of supply because they have so much excess capacity. 

Alas, the rest of Europe — and the wider world — didn't share in this success. 

Despite plenty of optimism and intrigue, nuclear power failed to win over the public — a fact that had a lot to do with the questionable waste it produced, as well as the incredible devastation that it was capable of when weaponised. 

And in the early hours of 28 March 1979, the partial meltdown of the Three Mile Island reactor in Pennsylvania was all it took to give critics all the evidence they needed. 

It proved (in their minds) that nuclear power was not only toxic, but a grave threat to anyone near it. 

In short, the plant endured a serious loss of coolant at the time. This resulted in a meltdown of the reactor core that caused irreparable damage to the entire facility and the threat of radiation spilling out into the local communities. 

Fortunately, the threat was contained. 

Despite the meltdown, nearly all the precautionary safety systems worked perfectly. 

And yet, for the critics, the possibility was all that mattered. 

As such, ever since this fiasco, the West has been far more apprehensive about nuclear power. 

It certainly hasn't helped that subsequent disasters — such as Chernobyl and Fukushima — have ensured that critics have had plenty of fodder to argue their point. 

Because while both of those events were terrible, the sad reality is they were also preventable. 

So this stigma around nuclear power continues. Despite all the science, all the innovation, all the safety precautions — nuclear is still a niche source of energy. 

But now, with Russia’s invasion of Ukraine sparking a new oil crisis, that could change. 

Perhaps this time we will see an appreciation for nuclear alternatives. 

In fact, we would argue that we already are... 

See, despite the opposition, Europe still has a fair number of nuclear reactors. 

At last count, there were 173 in total across the region, which you can see for yourself here: 

Fat Tail Investment Research

Source: European Nuclear Society

 

As I said, France has been leading the way for decades. Meanwhile, closer to the current turmoil, we can see both Ukraine and Russia are big nuclear players too. 

However, this is largely due to a widespread shift away from nuclear in recent times. 

Germany, for example, once had 17 reactors powering its nation. Since Fukushima, that number has dropped to the three you can see on the map today, which were also planned to be decommissioned by the end of this year. 

But that decision has now been complicated by the invasion and subsequent sanctions. 

With Russian oil and gas now no longer as readily available as it once was, plans may change. All we can say for sure is that Germany’s politicians are certainly considering the idea. Meanwhile, back in France, they’ve recently committed to 14 new reactors to be built by 2050. The UK is looking to follow suit too, pledging to build eight reactors of its own. 

So in this regard, there is at least some sort of future for nuclear power in Europe. 

Whatever future nuclear power has in the eurozone or beyond, uranium is a critical consideration. 

That’s why today, I want to tell you all about one Aussie small-cap that could have the answer to Europe's nuclear needs. 

In fact, this little-known company is sitting on the closest thing to an energy golden egg that I've ever seen. 

It’s an untapped opportunity that truly has exponential potential to provide the resources for a complete nuclear energy revolution. 

With sentiments wavering and criticisms crumbling, now is the time to strike on this stock. 

After all, just a simple change of heart is all it could take to send this company’s share price soaring... 

How to access the full details

What you’ve read so far is the fascinating backdrop of the latest recommendation from Ryan Clarkson-Ledward in Exponential Stock Investor

If you would like to read the whole issue…with a full rundown of the Australian-listed company that could play a key role in diverting the energy crisis Europe now finds itself in…