2012-11-20

Why is helium now so expensive?

With one of the last remaining Zeppelin operators closing its doors due to rising helium costs, you might wonder why helium is so expensive in the first place when we've been happily filling party balloons with it for the past 15 years at rock-bottom prices.

As you might guess, government is involved:

Though new private helium production plants are set to come online in the coming years —including a Wyoming plant expected to open later this year — private industry hasn't been as interested in producing helium as Congress hoped. Until more companies begin producing helium on their own, consumers are left with spiking prices and tightening supplies.
Under the federal system, those prices are unstable partly because they have less to do with supply and demand than they do about the need for the government, under the U.S. Bureau of Land Management, to pay off the cost of creating the Federal Helium Reserve
Because most of the world's helium is produced in the USA (principally Texas) the US Government gets to set helium prices, and for the past 15 years those prices have been low in an attempt to get rid of the US Federal Helium Reserve - currently around 10bn cubic feet of helium. Now that the US Government has to pay off the multi-$bn cost of creating the reserve in a fairly short time, prices have to spike. Nice one.

I knew helium was produced by uranium and thorium decay, but didn't realise that many natural gas fields contain reclaimable helium. Neither did I realise that escaped helium doesn't just go up to the atmosphere - it is so light that it escapes Earth entirely. So reclaiming it from the atmosphere is out.

For those arguing for greater Government involvement in industrial planning, consider what a mess has been made of an effective near-monopoly position in helium which has no effective substitute in many of its uses.

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