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Lab News -- April 11, 2008

April 11 , 2008

LabNews 04/11/2008PDF (500 kb)

Petroleum Studies 101: Sandia economist Arnie Baker lists multiple reasons for gasoline price jump

By Chris Burroughs

Next time you visit the gas station and fill your tank with $3.30 a gallon gasoline, reflect on this. Nine years ago you could have bought that same gas for 98 cents a gallon.

What is going on?

Sandia’s chief economist Arnie Baker (0320) says quite a lot, actually.

From a declining US dollar to restricted oil production in the Middle East, Russia, and Venezuela to increased oil demand by China and India, the price of gasoline and oil is on a seemingly endless upward spiral.

Last month natural crude oil hit $110 a barrel, compared to an average $72 a barrel in 2007. And just 10 years ago oil prices were at $14.80 a barrel in inflation-adjusted dollars.

Rising demand

Arnie says that at the top of the list of reasons for the high prices is a larger than expected demand for oil in industrialized countries and China’s rapidly expanding economy. The US consumed the most oil — 20.6 million barrels per day in 2006 — but China is playing a quick catch-up at 7.3. Other countries consuming large amounts of oil are Japan at 5.2, Russia at 3.1, Germany at 2.6, and India at 2.5 million barrels a day. The world as a whole consumes 86 million barrels a day and 31 billion barrels a year.

“The world economy has been growing at a pretty good clip,” Arnie says. “As a result, oil demand has remained high in the oil-hungry United States while it has been increasing sharply in developing countries like China and India.”

In February alone oil demand by China rose 6.2 percent, exceeding the 3.3 percent rise in January and the 3.5 percent increase for all of 2007. Also during February 2008, China increased its purchases of crude oil by 18.1 percent compared to a year earlier.

Stagnant oil production

At the same time the thirst for oil is on the rise, Organization of the Petroleum Exporting Countries (OPEC) and other oil producing nations are not increasing their output as much as they otherwise might, largely because they don’t need to. Rising oil prices have poured billions of dollars into their economies and reduced their need to produce more oil, Arnie says.

The only OPEC country that has agreed to significantly increase its oil production capacity is Saudi Arabia, but that process is taking longer than anticipated. Instability in other countries in the region, such as Iraq, is causing stagnant production levels, and Russian production, while still increasing, is less than it would have been if President Vladimir Putin had not reasserted control over that country’s oil and natural gas sector. Venezuelan President Hugo Chavez has “redirected” the national oil company PDVSA, disrupting what would have otherwise been higher levels of Venezuelan oil production.

“OPEC, especially Saudi Arabia, Kuwait, and the UAE [United Arab Emirates], acts as a balance wheel in the oil market through their surplus oil production capacity, which began to decline in 2003. By 2005 it was down to 1 million barrels a day, though it rose to 2.2 million barrels a day last year,” Arnie says. “When the ability to produce extra oil is low, any disturbances in the market — like instability in Nigeria, the war in Iraq, or problems with Iran over nuclear power — cause prices to rise. While excess capacity is expected to fall this year, it may grow to 3.6 in 2009 and begin to provide the market with some breathing room.”

Falling dollar

A third thread to the oil price increase is the falling US dollar, which is very low against other major currencies. During the first three months of this year, the euro rose 7.5 percent against the dollar. The dollar also tumbled 10.5 percent versus the yen.

Since oil is priced globally in dollars, any big markdown in the dollar gives oil exporters incentives to try to charge higher dollar oil prices. It also affects the US and its trading partners differently. For foreign buyers, whose currency is rising in value against the dollar, the effect of any oil price increases is much less. But American consumers have to pay 100 percent of any oil price increase with their dollars.

China can afford $100 a barrel oil

China is an example. That country’s currency is rising in value, but it still can sell its wares overseas cheaply — and it sells a lot. As a result, China has a huge financial reserve and can afford $100-a-barrel oil.

As the dollar’s value slips, the stock market gets more and more “nervous,” Arnie says, causing people to move speculative money from stocks into commodities such as oil, metals, livestock, corn, and soybeans. The new speculative money pushes the commodity prices higher. “All this helped oil prices leap to $110,” he says.

Arnie cites one more reason for pain at the pump — not enough US oil refining capacity. Existing refineries in the US produce gasoline and other end-use products in the 90 percent plus range of capacity. While refining capacity has crept up a small amount since 2005 through operating efficiencies, the solution — adding significant refinery capacity — is more easily said than done. People don’t want to live near refineries, and refineries are subject to tight environmental restrictions. No new refinery has been built in the US since 1976. The lack of enough refineries is being made up for by imported products such as gasoline and other refined products — averaging about 13.4 million barrels per day in 2007.

“These reasons and more have led to the increase in oil prices,” Arnie says. “Some oil analysts believe that between 2009 and 2011 prices will return to the 80 dollars a barrel level or below. Others think prices will remain in the $90 range or above. To me it’s a big toss-up right now, but markets eventually work, and not only on the way up.” . -- Chris Burroughs

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Global warming, energy security are drivers behind ERN’s ‘big idea’ initiative

By Mike Janes

The US must develop and execute a coherent energy strategy to maintain national security, dramatically reduce greenhouse gas emissions, and ensure long-term economic prosperity. The US energy community — including the national labs, industry, and academia — must rally around a nationwide initiative and contribute in a meaningful way if a US energy enterprise is going to be successful and truly secure the nation’s energy future. The role of the nation’s science, technology, and engineering communities is critical to the success of this effort.

That’s a tall order, but it’s the context in which Sandia’s Energy, Resources, and Nonproliferation (ERN) Strategic Management Unit is funding a “big idea” proposal that it hopes will engage a broad community and influence national decision makers to lead the country down the path of American competitiveness, energy security, and environmental stability.

The proposal is being developed under an ERN-funded effort. It will initially focus on a Low-Carbon Transportation Energy concept and examine the value proposition and business model that could be employed as a public/private endeavor. Though the ERN’s management team is calling it the “Big Idea,” Terry Michalske (8300) and Margie Tatro (6200) explain that the Low-Carbon Transportation Energy investment is actually part of a much grander vision.

“This may be the first ‘big idea,’ but it’s really meant to plant the seed for an even bigger idea, one that we hope will lay the groundwork for a federal initiative,” says Terry.

Starting with the Low-Carbon Transportation Energy concept, the ERN’s “board of directors” aims to advance a national framework for energy policy that supports what the federal government might call the National Energy Innovation Initiative (NEII). “Other topics, such as electric grid integration and nuclear energy security, offer potential for other innovation ‘hubs’ that could conceivably be led by Sandia,” says Margie.

When successfully developed, the low-carbon proposal will be presented to DOE decision makers as a potential model for an energy innovation hub, another important component to the NEII idea. Energy innovation hubs would have a clear, distinct, outcome-oriented focus (low-carbon transportation energy and renewables grid integration, for example) and would anchor the NEII and promote international knowledge sharing.

CRF and CINT demonstrate new approach

Two distinct examples — one with a rich history, the other with a more recent but no less successful blueprint — inspired ERN management to think differently about how Sandia works and motivated DOE to explore models that are open and inclusive.

“DOE’s leadership believes it needs to develop a more effective framework for linking science and innovation,” says Terry. To that end, the Combustion Research Facility (CRF) and its more than 25 years of success in information sharing, leading-edge science, and commercial partnerships offers one viable model, one that DOE uses as an example of a facility where scientists and engineers work together to bridge the “valleys of death” in technology development efforts, he says.

“Securing America’s energy future will not be possible through technology development alone,” says Julia Phillips (1100). “Fundamental scientific inquiry is needed to provide the understanding that will enable revolutionary technologies we can’t imagine today. We need a mechanism, such as the Energy Innovation Hubs, to accelerate the translation of scientific discoveries to technologies,” she says.

Similarly, the recent success of Sandia’s Center for Integrated Nanotechnologies (CINT) project presents another example that Sandia’s ERN leadership is drawing upon as it considers how to advance a new national energy initiative. CINT is one of five Nanoscale Science Research Centers (NSRC) that, together with other elements, form the National Nanotechnology Initiative (NNI). That endeavor, launched under the Clinton administration, addresses the diverse aspects of nanoscience and technology. Terry likens each NSRC concept to an energy innovation hub, and the NNI to NEII.

“The CRF and CINT have both proven to be invaluable resources for universities, other research institutions, and the commercial sector,” says Terry. “They are the cornerstones of their respective disciplines — combustion research and nanoscience — and, in their own ways, have helped jump-start the science and research activities devoted to each of those fields. Similarly, a low-carbon transportation energy program, developed as one of several energy innovation hubs, could be an important piece of the overall energy puzzle.”

Andy McIlroy (8350) spearheaded the Low-Carbon Transportation Partnership concept, which was selected from a handful of other ideas. He says the other proposals, themes of which included dedicated research programs into the electric grid, renewable energy sources, and nuclear power, are also viable energy innovation hub ideas and could very well be revisited by Sandia in the future.

“It makes sense right now to focus on the transportation sector,” says Andy. “Sandia is already considered a leader in combustion science and a growing leader in alternative fuels development. We have demonstrated a unique ability to integrate science into the marketplace. That’s what we hope to achieve with the low-carbon transportation energy idea.”

The Transportation Energy Innovation Hub proposal that Andy, Ellen Stechel (6338), and others are developing will contain a number of key elements, including a focus on knowledge-generation and a workable path to innovation. It will also feature a private sector leadership component (currently being identified) that is integrated with DOE science and energy program activities. Other elements will include:

The hope, says Terry Michalske, is that a successful low-carbon transportation energy investment will position Sandia as an early “pilot energy innovation hub” and be used to demonstrate the concept to DOE. Such initial successes, he adds, will help build acceptance for the “energy innovation hub” model and lead to follow-on strategies in anticipation of a future, large-scale DOE program. — Mike Janes

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Sandia licenses its less-than-lethal flash-bang technology

By Stephanie Holinka

Sandia has licensed its safer, nonexplosive fuel-air diversionary device technology to Defense Technology Corporation of America, located in Casper, Wyo.

Diversionary devices — also called stun grenades or flash-bangs — are less-than-lethal devices used in a wide variety of law enforcement and military operations. Like a grenade, the device is activated by pulling a pin. When thrown, the flash-bang creates a loud sound and bright flash of light to temporarily distract or disorient an

adversary.

Flash-bangs are used in law enforcement and military operations such as hostage rescue, room clearing, crowd control, and other specialized operations. Military or law enforcement personnel will typically break down a door or smash a window of a building and toss in the diversionary device during a forced entry.

More than 20 years ago, Paul Cooper and Ed Graeber, both now retired from Sandia, created the original Mk 141 flash-bang diversionary device, which was intended for limited (and specialized) applications. It was state of the art for its day. Paul’s protégé, Mark Grubelich (6331), built on that original groundbreaking work and came up with an improved flash-bang — far safer for law enforcement and the military.

Flash-bangs that use existing pyrotechnic technology function like explosive devices — once ignited a “flash powder” mixture of aluminum and potassium perchlorate powders quickly reacts, resulting in an explosive output, Mark says. “They function like any other grenade-type explosive device but without any shrapnel, just a flash and a bang.”

Like any other explosive device, flash-bangs can be damaged in the field, poorly manufactured, or incorrectly deployed. With the older pyrotechnic technology employed by the previous generation of flash-bangs, any of these types of problems can result in horrific injuries.

“There are a number of disadvantages associated with currently available diversionary devices,” Mark says. “Serious injuries have resulted from their use both operationally and in training.” Because safety is of paramount importance, the new fuel air technology was developed to address the issues associated with the severe over-pressure produced in the proximity of current diversionary devices.

In this new diversionary device, Mark says, the flash-bang produces a dust explosion on a very small scale — a gas generator rapidly ejects and ignites aluminum powder. That deflagrating cloud of burning aluminum powder provides an intensely bright light and an “explosive” noise. The body of the diversionary device itself does not explode, making the operation safer for the person deploying the item and for anyone in the area. This lessens the likelihood of injury and the severity of the consequences should a mishap occur.

Mark recently appeared on the History Channel series Modern Marvels where he explained how the improved technology functions and also demonstrated the device.

The new flash-bang can be made into many body styles appropriate for fielding by the military and law enforcement for a variety of applications, says Mark. Economical and refillable versions can be made for training purposes. A heavier version of the flash-bang could also allow it to be thrown through windows.

The technology was originally licensed in 2002 to a different company, but the licensee did not bring the product to market. “Sandia looks forward to Defense Technology making a safer device available to the military and to law enforcement agencies all over the country,” says Mark. -- Stephanie Holinka

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Sandia researchers: Global water shortage looms

By Chris Burroughs

A crisis is looming over water shortages worldwide. By 2025 more than half the nations in the world will face freshwater stress or shortages and by 2050 as much as 75 percent of the world’s population could face freshwater scarcity.

So say Mike Hightower (6332) and Suzanne Pierce (6313), Sandia water experts, in an article in a recent issue of Nature.

“This growing international water crisis is forcing governments to rethink how they value and use and manage water, especially because economic development hinges on water availability,” they say. “Drinking water supplies, agriculture, energy production and generation, mining, and industry all require large quantities of water. In the future, these sectors will be competing for increasingly limited freshwater resources, making water supply availability a major economic driver in the 21st century.”

Freshwater withdrawals already exceed precipitation in many parts of the US, with the worst shortfalls often in areas with the fastest population growth, particularly in the Southwest. But this is also very much a global problem.

What can be done to help solve the water dilemma? The answers are not simple, say Mike and Suzanne, and will involve usage of all water sources — more than just freshwater supplies as has been the primary focus in the past. Innovative treatments will have to be used — treatments using advanced membrane separation technologies, as well as treatment of nontraditional water sources such as wastewater, brackish groundwater, seawater, and extracted mine water.

Mike and Suzanne say that to some extent this is already happening. In the United States, wastewater reuse is growing by 15 percent per year.

“There are other, cheaper ways to increase water productivity, such as improving water conservation and efficiency,” Mike and Suzanne write in the Nature article. “But water reuse can help to expand these traditional approaches by matching the quality of water supplies to needs, and substituting nontraditional water for freshwater where appropriate.”

As an example, wastewater, seawater, or brackish groundwater could be used by electric power plants for cooling and processing instead of freshwater. Another example: Power plants could begin switching to renewable energy technologies that do not need water for cooling, such as wind and solar electric; and introducing technologies to condense evaporation from cooling towers and capture and reuse the water. -- Chris Burroughs

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