Helium Shortage: Guess The Cause

[Harry]

Originally Posted by FormLetter

Here is the paragraph you referred to:

Spoiler:

"Because the original base pricing of federal helium started at below market levels, the BLM, at the recommendation of the National Academy of Sciences, is now making unpredictable increases to adjust for the base pricing up to market levels and to incorporate additional fees for costs that are specific only to the operation of the BLM reserve," he told the committee. This irregular pricing, he said, "drives up the price of helium for all consumers, not only here in the United States, but also around the world whenever the BLM crude price is adjusted.

So they're charging fees above the market level. That is more like taxing it than price-fixing I guess.

How do we know what the market level is?

[Harry]

Anyway, this seems to have little to nothing to do with government. Shocking.

The helium shortage has captured headlines across the country. Over the past few months, there have been hundreds of articles written about the current state of supply and the rising costs of helium. Just in the past few days, headlines like “Helium shortage deflates grad parties” and “Helium shortage threatens parties as we know them” have graced the banners of local and national news outlets across the country. While most of these articles fail to capture the gravity of the situation beyond the outlook for party balloons, this is not the real concern. What is concerning is the amount of misinformation swirling around about the helium shortage.

“The helium shortage was caused by the government.”

This fallacy pervades news reports, and the bottom line is it’s simply not true. An Associated Press article appearing in such publications as The Washington Post states, “Helium is in short supply because of the 1996 Helium Privatization Act that called on the government to sell off most of its helium reserves by 2015.”

Meanwhile, an editorial in Tuesday’s edition of The Boston Globe reads, “The nation is selling off its vast helium reserve — in such a ham-fisted way that it’s led to a shortage of the gas.”

These statements are not only simplistic, but inaccurate. The Chicago Tribune, on the other hand, correctly reported that the helium shortage has been caused by a variety of coinciding factors, particularly plant outages and shutdowns across the globe. It helps that The Tribune spoke with industry experts like Linde’s head of global helium, Nick Haines.

I also had the pleasure of speaking with Haines a few months ago, who explained that helium is a globally traded product, and outages anywhere in the world affect everyone. Planned and unplanned outages across the world are largely to blame for the current situation, not the U.S. government’s plan to sell off its reserves.

“The United States is running out of helium.”

While partially true, it’s not for the reasons outlined by the media. An article in The Washington Post attempted to explain the need for legislation to replace the Helium Privatization Act of 1996 (HPA), but when it was reprinted in The Boston Globe, careless editing made the statement even more off base: “Thanks to a 1996 law that has forced the government to sell off its helium reserves at bargain-bin prices, the country’s stockpile of the relatively rare and nonrenewable gas could soon vanish.” (WP used the word “dwindle” in place of “vanish.”)

Here’s the problem with that statement. Under the existing system, the federal helium program will be shut down long before it ever runs out of helium. This is one of the main reasons the industry is scrambling to get new legislation in place before the HPA expires. Air Products’ Director of Helium Sourcing Walter Nelson told the Senate that “At current production rates of about two billion cubic feet per year, the reservoir could continue to produce helium for five to six more years.” He also noted that “Helium was removed from the reservoir at rates lower than those projected.”

So while we may run out of helium if the HPA expires, it’s not because the government is selling it off too fast. It’s simply because we would lose access to stockpiles that currently provide almost a third of the world’s helium, stranding valuable helium supplies.

Overall, the media is sending a lot of fuzzy and often incorrect messages.
Distributors may be wise to take advantage of this opportunity to share their expertise with local news outlets, and receive some visibility in exchange.

http://www.weldingandgasestoday.org/...lium-shortage/

http://articles.chicagotribune.com/2...alloon-algeria

[FormLetter]

Originally Posted by Harry

How do we know what the market level is?

I was just basing it on the paragraph I spoilered (accidentally, I should have just quoted it).

[ubernerd]

Originally Posted by Harry

How do we know what the market level is?

Good point. Until gummint stops meddling, we won't know.

[Harry]

Originally Posted by FormLetter

I was just basing it on the paragraph I spoilered (accidentally, I should have just quoted it).

Yeah, I guess my question was more for the person making that statement in the article.

[FormLetter]

Originally Posted by Harry

Yeah, I guess my question was more for the person making that statement in the article.

Call them.

[Triweasel]

Originally Posted by Westley

M is a common abbreviation for thousand. Based on Latin and all that. It's more old school now, but it's certainly not a typo, just a writing style thing.

ah got it. makes sense that it wouldn't be half metric/half english anyway.

i also thought of kfc when i saw that and it made me hunger for some original recipe.

[JasonScandopolous]

Originally Posted by FormLetter

I was just basing it on the paragraph I spoilered (accidentally, I should have just quoted it).

I read the line you quoted above in the way that an actuary would: "We raised rates because there was an expense associated with this LOB that we weren't previously considering. With that as well as other costs in mind, prices are now higher at $X".

[Mel-o-rama]

I should be studying, but this article helps clarify a few things.

http://en.wikipedia.org/wiki/Helium

Points:

Even though helium is the second most abundant element in the universe, it's very rare on earth. It's a very small part of our atmosphere, and likes to escape into space.

The helium we use comes mainly from byproducts of fission, which are largely found mixed in with natural gas.

We have a limited supply of helium.

Yet, balloons and neon lights make up a very very small part of worldwide demand of helium.