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Nuclear Power Fears at New Heights Despite Safety, Viability

Monday, 11 Apr 2011 | 5:18 PM ET

Japan may raise its nuclear crisis to a level seven from a level five, according to the Kyodo news agency. That level would equal Russia’s Chernobyl disaster as the earthquake-plagued nation desperately tries to contain the amount of radiation admitted. The Three Mile Island accident in 1979 was a level 5.

Nuclear power-related shares are taking a hit, Germany may abolish nuclear power altogether in 12 years and iodine tablets are selling fast on the U.S. West Coast as radiation fears reach new heights. The global overreaction from this rare 9.0 magnitude earthquake and massive tsunami that followed may set back the safest and easiest way for this country to solve its energy crisis, investors said.

“The Fukushima meltdown may mark a high point in anti-nuclear hysteria,” said John Downs of Euro Pacific Capital, in a note to clients Monday. “As a result, investors should not treat nuclear-related stocks as if they were radioactive. Eventually, reason prevails, and the truth is that nuclear power is hands down the best option available for powering the 21st century.”

Downs goes on to cite the rarity of these kinds of events in the 60-year history of the commercial nuclear energy, especially ones that cause civilian casualties.

“Although there may very well be deaths associated with the Japanese meltdown in the months and years to come, the only reactor incident to cause civilian deaths to date was Chernobyl, a poorly run facility in the bankrupt late-Soviet Union (amazingly built with no containment vessel),” said Downs.

But among the most intriguing stats that Downs includes in his report is that “the average coal plant releases 100 times more annual radiation than a comparable nuclear plant.”

The analyst likely got this statistic from an article in “Scientific American” from three years ago, which used a similar statistic citing work from the Oak Ridge National Laboratory and a 1978 paper in the “Science” journal.

“The fly ash emitted by a power plant -- a by-product from burning coal for electricity -- carries into the surrounding environment 100 times more radiation than a nuclear power plant producing the same amount of energy,” according to the article from the magazine.

An article in today’s New York Times, gives a bad name to the supposed other “clean” alternative, natural gas. While this fuel burns cleaner than other fossil fuels, the article states that the “planet-warming” methane gas released during the unconventional drilling process used today offsets that eventual benefit.

Shares of Shaw Group, which builds power plants including nuclear ones, have taken a hit since the Japan disaster on concern global demand will decrease. It said Monday that revenue this year may miss the company’s previous guidance. Still the CEO sounded hopeful in the press release.

“While the devastating events in Japan have drawn significant attention to the nuclear power industry, work on our nuclear power units currently under construction continues as planned,” said J.M. Bernhard, chairman and chief executive officer of Shaw. “Additionally, Shaw’s experience in performing construction services at nuclear power plants and emergency response services after natural disasters, positions us to assist with the recovery efforts in Japan and any future modification needs to existing power plants in the U.S. and internationally.”

Flour and Babcock & Wilcox, two other power infrastructure companies, are due to report in early May and early June respectively. Both have taken a hit from the Japan disaster and the subsequent not-in-my-backyard attitude. Still, these companies may have one champion still left: a pragmatic President.

“Nuclear energy doesn't emit carbon dioxide into the atmosphere,” said President Obama in a March 30th speech on clean energy following the Japan disaster. “To those of us concerned about climate change, we've got to recognize that nuclear power, if it's safe, can make a significant contribution to the climate change question. And I'm determined to ensure that it's safe.”

For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC.


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Trader disclosure: On April 11, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Weiss is short (X); Weiss is short (RTH); Weiss is short (IWM); Weiss owns (VZ); Weiss owns (QCOM); Weiss owns (DVN); Weiss owns (COP); Weiss owns (BTU); Weiss owns (JPM); Weiss owns (MSFT); Terranova owns (JPM); Terranova owns (C); Terranova owns (VRTS); Terranova owns (UPL); Terranova owns (TCK); Terranova owns (BAX); Terranova owns (XOM); Terranova owns (AKAM); Karabell owns (AAPL); Karabell owns (BHP); Karabell owns (BIDU); Karabell is long (GOOG); Karabell owns (GS); Karabell owns (MRVL); Karabell Owns (SINA); Seymour owns (AA); Seymour owns (AAPL); Seymour owns (F); Seymour owns (INTC)

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