For quite a while the nuclear industry has been lying low but there are stirrings once again as nations look to improve the efficiency and capacity of power generation notes Cecil Musgrave of in The Energy Report.

If a person consumed only nuclear-generated power, the amount of waste generated over his or her lifetime could be contained in a soda can. Compare this to the trainloads of coal delivered daily to coal-fired power plants and nuclear power seems like a no-brainer. Cecil Musgrave of sees nuclear power as a bridge to a renewable energy mix-but only if supply is reliable.

In this interview with The Energy Report, Musgrave explains why supply shortages may create a price spike for the commodity and names some uranium juniors that are poised to deliver the goods.

The Energy Report: Let's talk about the state of the international market for uranium. Profit margins for producers are still slim. Do you see a possibility that prices will rise this year?

Cecil Musgrave: Uranium prices sold off sharply after the Fukushima Daiichi nuclear power plant accident in March 2011, and have steadily drifted lower since then, from around $70 per pound ($70/lb) to its current price of around $43/lb. My charts say that uranium may have put in its bottom last November before bouncing over 10% on the back of Japan's election in December.

Since Fukushima, market sentiment for anything nuclear power related, like uranium, has been risk-off. While time was needed to stress test nuclear plants worldwide, the market's main concern was how the media, the public and governments around the world would react. But the facts continue to be on the side of nuclear power as a practical solution for a growing world that requires abundant, low-cost and environmentally safe energy.

Despite uranium's long-term fundamentals, which have never looked better, markets hate short-term uncertainty. I see this as mainly a timing issue. The World Nuclear Association shows there are 435 operable nuclear reactors today, with 65 more under construction, 167 in the planning stages and 317 more proposed as of January 2013.

Markets tend to exaggerate trends, both up and down. After a steep selloff in uranium that lasted almost two years, sentiment seems to be starting to swing positively again. Japan now has a pro-nuclear government; two of Japan's reactors are back online and the recent elections may accelerate this process. Last February, the US approved the construction of a two-unit nuclear power plant at the Vogtle complex in Georgia-this is the first new nuclear reactor to be built in the US in over three decades.

China will be a key uranium demand driver-16 reactors are operating now, 29 under construction, 51 planned and 120 proposed. Other demand-generating countries include India, Russia, the UAE, Ukraine, the UK, Canada, and South Korea.

The supply side is also bullish. Lower prices have put the brakes on several large uranium developments. BHP Billiton (BHP) deferred the expansion of its Olympic Dam mine in Australia-the world's largest-known single deposit of uranium. Cameco Corp (CCJ) deferred its Kintyre project-also located in Australia. Paladin (TSX: PDN) deferred an expansion at its Langer Heinrich mine in Namibia. Kazatomprom and Uranium One (TSX: UUU) decided it would be uneconomic to mine at its Zarechnoye South deposit in Kazakhstan. Many smaller uranium miners are in the same situation.

I doubt that the absence of this previously anticipated supply has been factored into uranium's current price. Keep in mind that the 2007 uranium price spike to $137/lb was probably due in part to flooding and production delays at Cameco's Cigar Lake mine in Canada-the world's largest undeveloped high-grade uranium deposit. Mine commissioning is now expected mid-2013.

Annual uranium demand is ~180 million pounds (180 Mlb) with ~140 Mlb mined. Much of that ~40-Mlb supply shortfall has been made up for by the Megatons to Megawatts program, wherein uranium from Russia's nuclear warheads is recycled. This program is scheduled to end later this year, further straining global uranium supply.

Uranium mining is highly regulated and even if the price spiked again, it would take years to put those deferred mines into production. In addition, the TSX Venture market has been cut in half over the past two years, making it very tough for junior explorers to fund new projects. I'd be surprised if uranium prices weren't significantly higher a year from now.

Tickers Mentioned: BHP, CCJ