There may be a reason why this bull market is now running on six years instead of the usual four. Uranium miners began lobbying the U.S. Department of Energy to allow the industry to rebuild after a two-decade-long uranium depression or drought.

First, a bit of important background on this.

Because we meticulously researched many of the developments launching, sustaining and ending those ‘uranium stampedes,’ when we compiled our uranium guide, we wondered when the price action would turn down and put investors at risk.

According to NUEXCO/TradeTech charting of the previous two uranium bulls, both ran for about 48 months and then sputtered for the next 15 years both times.

The short-lived, mini-bull of the mid-1990s involved another government interference – the LEU-HEU pact between Russia and the United States – and brought about premature hope. It served as an interruption to the 15-year decline the market was then experiencing, and it did not gain sufficient notice to attract capital to revive the industry.

The present bull market, as have the previous two, have attracted large amounts of financing for both noteworthy and highly speculative uranium projects.

We wondered if the writing was on the wall, and whether the government would strike a third time to continue the 48-month up/15-year down pattern tracking back to the 1950s.

Over the past year, we were apprised of the next uranium sale by the U.S. Department of Energy (DOE). We had believed the amount of uranium to be sold could run as high as five million pounds U3O8 equivalent. This past week, that worry disappeared.

We interviewed Ed Rutkowski of the U.S. Department of Energy’s Nuclear Fuel Supply Security group. “We don’t plan to dump uranium,” Rutkowski told StockInterview.

Rutkowski told us the amount of uranium to be sold in 2007 would be ‘very small.’ The purpose for this sale was to pay the bills at the federal processing facility in Portsmouth, Ohio. This facility cleans up the uranium and brings it up to ASTM spec so it can be used in U.S. nuclear reactors.

Just as we were expecting a lot more uranium to hit the market this summer, so were many miners and utilities. There were rumors about five million pounds being dumped by DOE in the market. This figure came from the Energy and Water Appropriations Bill for Fiscal Year 2006.

In November 2005, Congress authorized uranium sales for remediation efforts, such as the uranium cleanup at the Portsmouth facility, but limited the sales to “as long as the volumes do not exceed 10% of the U.S. annual fuel requirement.” Because U.S. utilities annually consume about 50 million pounds U3O8 equivalent, many suspected the DOE would sell up to their legislated limit – about five million pounds.

Based upon this data and Ed Rutkowski’s frank discussions, the amount of nuclear fuel to be sold ‘probably some time this summer’ might be so modest, it would not faze the current uranium bull.

We talked this matter over with TradeTech chief executive Gene Clark, whose consulting company sets the weekly spot price. NUEXCO/TradeTech has been setting the weekly spot price longer than any other service – since 1968. It is the only consulting company which has continuously published a month-end spot uranium price.

Dr. Clark pointed out the rising uranium price had proven a blessing for the DOE in September 2006. “Because the price of uranium had gone up so much, they raised enough money from last September’s auction – by only selling a little more than 1.8 million pounds U3O8, that they paid the costs to operate the facility through 2007,” he told us.

The U.S. Department of Energy is likely to have a sale, according to Clark, before the end of the year, to pay their Portsmouth operating bills through 2008. But, they are highly unlikely to sell more than a token sum, relative to the amount the DOE holds in inventory.

He calculated DOE’s ‘very small’ amount of uranium could be about 520 thousand pounds U3O8 equivalent – in the form of UF6. Clark believes the current market price for uranium would likely cover the operating costs through 2008. But he added, “With a rise in market prices anticipated, the amount required to be sold could be even less.”

Clark told us the DOE would either go to Congress (not likely) for the money or sell the modest amount of uranium. “The government’s fiscal year ends in September,” said Clark, “so the sale might take place before then. They probably have until November or December to raise the money from a uranium sale.”

Uranium Producers of America

Rutkowski told us, “We have a lot of inventory, but uranium miners are worried that DOE would affect the market. We want to be good neighbors with them.” He also added, “Cameco Corp’s Fletch Newton indicated it would take 7 to 10 years to get the U.S. uranium industry up and running.” Mr. Newton is the chief executive of Power Resources, the Cameco Corp (NYSE: CCJ) subsidiary, which is presently the largest U.S. uranium miner.

Dr. Clark added another dimension to this, “The uranium producers were in a political ‘full-court press’ on DOE to prevent sales of this material, stating that such sales would undercut market prices.” He was right. The dumping would have murdered the bull before it stretched its legs.

Some of the credit behind the current uranium bull market must go to Jon Indall, legal counsel for the Uranium Producers of America (UPA). We’ve talked to Mr. Indall, and we are impressed with his very strong political connections in both New Mexico’s Capitol building and in U.S. Congress. He outlined UPA’s plans in an interview we conducted over a year ago with Mr. Indall.

With the backing of uranium producers, such as Cameco Corp and Denison Mines (Amex: DNN), Indall’s teams has worked closely to sell the UPA case to the Department of Energy. We found evidence of this, during our interview with Ed Rutkowski. He told us, “Miners are raising financing for their projects.”

We’ve also observed Mr. Indall and his staff have helped change the political climate in New Mexico for companies hoping to mine again in the prolific Grants uranium district, such as Uranium Resources (URRE), Strathmore Minerals (STHJF) and Laramide (TSX: LAM).

Perhaps this time, the up and down pattern of the uranium cycle has been extended. If this does happen, it could come about because of the insistence of uranium miners to help rebuild their industry. For now, the U.S. Department of Energy seems to be cooperating.

With Ed Rutkowski, we together calculated the value of the U.S. uranium reserves, which could be offered for sale. Six years ago, they stood at less than one-quarter billion dollars. Last week, during our interview, the market value of those reserves (according to the April 30th long-term uranium price) was greater than US$4 billion.

James Finch contributes to StockInterview.com and other publications. His focus on the uranium mining and nuclear fuel sector resulted in the widely popular “Investing in the Great Uranium Bull Market,” which is now available on http://www.stockinterview.com and on http://www.amazon.com