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Licata: Embrace Alternative Energy or Face $8 Gas

By    |   Thursday, 12 May 2011 02:43 PM

The United States must embrace nuclear and alternative energy or face $200 crude oil and $8 gasoline prices, says John Licata, chief commodity strategist for Blue Phoenix, a commodities and metals research company.

“Crude-oil prices have the potential to move a lot higher only because we keep hearing about alternative-energy sources coming into the market but they haven’t,” Licata tells Newsmax.TV. "Quite frankly, the Obama administration has made a lot of movements toward subsidies that really haven't been put into place."

The Obama administration has said the country should rely more on wind and solar power as well as alternative fuels such as ethanol.

More nuclear power, however, would seriously dent the country's dependency on foreign oil.

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The government, while skittish about boosting nuclear capacity in wake of the disaster in Japan, needs to get over its worries and streamline the process of bringing more nuclear power plants online.

"Because of the administration being cautious on the heels of what just happened in Japan, I think that that caution flag is causing a lot of concern, and I think that has caused a lot of companies to focus back on the good-old-boy mentality, including Exxon's moving away from natural gas to focus more on crude oil," Licata says.

"It's my opinion that we have to embrace nuclear energy, we have to embrace alternative energy. If we don’t, I think we can set ourselves up for $200 crude oil and $7 or $8 gasoline at the pump and make our prices here more aligned to what's been seen in Europe."

Natural gas, meanwhile, has room to grow.

"I think natural gas prices have the potential to have the largest move from now until the end of this year and largely that's because at the end of this month, summer driving season starts and June 1 is the beginning of hurricane season," Licata says.

"While crude oil prices have been going higher, natural gas prices have been pretty lethargic only until the last couple of days, when we actually saw the expiration of the June contract come off the Nymex in July," he said. "In July, people start to see a lot more storm activity happening. So it's my opinion the short squeeze could cause natural gas prices to move higher."

While natural gas prices are due for a rise, gold is probably due for a breather.

Gold prices have been rallying on inflation fears but also because the precious metal is more readily available to the average investor through exchange-traded funds.

"It's making a false reading in terms of gold," Licata says.

Furthermore, Barrick, the world's largest gold miner, is in the process of acquiring for $7.3 billion Equinox Minerals, a Canadian-Australian copper miner.

"If the largest company in the world in terms of gold is saying that they're going to start moving away, maybe that was a clear signal to the marketplace that even they think that there's a top-end price of gold right now."

Yet metals investors shouldn't fret. There are fresh investment alternatives out there.

Take vanadium, a metal that can be used in the production of alloys.

"I think in a marketplace right now that's trying to move forward and kind of save the amount of minerals that are in the world, vanadium can be mixed with steel and actually cause maybe a third less production of steel to be used, so it's a green metal," Licata says.

It has other uses as well, even for those already deemed efficient. Take lithium. Electric cars running on batteries that use lithium and magnesium components will need hours to recharge.

"If we use vanadium, I think that we can actually have it a lot faster. Also a major use of vanadium is taking the strain off the power grid," Licata says.

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The United States must embrace nuclear and alternative energy or face $200 crude oil and $8 gasoline prices, says John Licata, chief commodity strategist for Blue Phoenix, a commodities and metals research company. Crude-oil prices have the potential to move a lot higher...
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Thursday, 12 May 2011 02:43 PM
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