If you pay attention to the commodity space --- and if you read HardAssetsInvestor.com, it’s a safe bet that you do pay attention --- you probably know at least a little about uranium.

A big theme behind the recent awareness of uranium stocks/products is the possibility that global demand for power may exceed what the oil market can deliver over the next few years.

China and India each use roughly one barrel of oil per capita (China a little more and India a little less) while we in the U.S. use more like 25 barrels per capita. The thought is, and you know this, that China and India will need more oil, or something else, over the course of the next decade. This dynamic, combined with the debate over whether the globe is facing peak oil, creates a visibility for more nuclear power. You don’t have to buy into that argument, but that is the simplified case for uranium. Well … that and plans for new plants in places like China and Vietnam.

One other interesting nugget is that the cost of uranium is a very small cost component for creating nuclear energy. It’s kind like the cost of eggs. Eggs have gone up a lot, but they could double in price from here without really changing your experience at the grocery store.

BHP Billiton (BHP) and Rio Tinto (RTP) are each big players in the space (BHP mined 2,498 tonnes from March 2006 to March 2007, while RTP mined 5,698 tonnes in calendar 2006), but uranium does not contribute enough to either company’s top or bottom lines to move the needle.

The Uranium Participation Corporation (U.TO in Canada and URPTF in the US) is a closed-end fund of sorts that simply owns uranium, similar to how streetTRACKs Gold Trust (GLD) owns gold. It always trades at a large premium to its NAV (8.3% as of the last report on May 31), which might dissuade some folks, but it has captured a chunk of the move in uranium (but to be clear, not all of the move).

The two most widely known pure plays are Cameco (CCJ) and USEC (USU). CCJ is the big boy in the group of pure plays, with 20 percent of the world’s mined production. It is profitable and has millions of pounds in proven reserves, but is a volatile stock and expensive by just about every measure.

USU is kind of a strange company. It gets its uranium via contracts with Russia to get uranium from old warheads. Similar to CCJ, it is volatile and expensive, but with one big difference. Last year, CCJ had a big setback with the flooding of its Cigar Lake project (the largest undeveloped site in the world), which set the company back several years and will likely impact earnings for the rest of the decade. USU will not have to deal with bad news from a mine impacting production. While there is no specific visibility for USU to have trouble with its Russian contracts, it does create a variable that will dissuade some folks.

There are many mid-tier and junior miners in the space that should probably be explored (pardon the pun) in the pursuit of making a portfolio decision in this group as well. A few of the bigger names in the second tier include Paladin, Dennison and SXR Uranium One, and they get smaller from there.

Regardless of how good or bad of a pick you make in the group, you are adding volatility to your portfolio. The long-term trend, only touched on in this article as a function of space, is compelling and creates an obvious path for ongoing outperformance. But while I believe in the theme, I only allocate a small portion for some clients to URPTF (about 2 percent) to avoid mining risk, and I own CCJ personally at about a 3 percent weight.

The reason to write about uranium now is that the spot price is just off its high and some of the stocks have stalled out, which possible creates a base for a good entry point.