Will there be a helium crisis?

by on August 20, 2010 at 7:05 am in Economics, Science | Permalink

Is it possible that the relative price of helium will rise in nearly unprecedented fashion?  Robert Richardson voices his opinion:

[The US government should] Get out of the business and let the free market prevail.  The consequence will be a rise in prices.  Unfortunately party balloons will be $100 each rather than $3 but we'll have to live with that.  We will have to live with those prices eventually anyway.

He notes:

There is no chemical means to make helium.  The supplies we have on Earth come from radioactive alpha decay in rocks.  Right now it's not commercially viable to recover helium from the air, so we have to rely on extracting it from rocks.  But if we do run out altogether, we will have to recover helium from the air and it will cost 10,000 times what it does today.

Yet helium is the second most abundant element in the universe and it accounts for 24% of the mass of our galaxy, according to Wikipedia.  The marginal cost curve stands between plenty and scarcity.

We also use helium in machines designed to detect radioactivity.  Right now the government is committed to selling off its strategic reserve of helium, located near Amarillo, Texas, by 2015.  Here is a dialog on helium extraction.  Here is a dialog on the forthcoming helium crisis.  Here is another short article.  Here is a book chapter on the helium reserve.  Richardson claims the helium crisis will arrive in twenty-five years' time.

David Curran August 20, 2010 at 7:38 am

‘Right now the government is committed to selling off its strategic reserve of helium,’ Rand claims this cannot happen here http://www.youtube.com/watch?v=zEruXzQZhNI#t=1m44s
Which might be of historical interest

Mike Wallace: Suppose under your system
of self-sufficiency, one single corporation were to get a stranglehold
on a vital product, or a raw material, uranium for instance,
which might be vital to the national defense,
and then would refuse to sell it to the government. Then what?

Ayn Ran: Under a free system no one could acquire a monopoly on anything.
If you look at economics, and economic history,
you will discover that all monopolies have been established
with government help, with the help of franchises, subsidies,
or any kind of government privledges.
In free competition no one could corner the market on a needed product.
History will support me.
Mike Wallace: There is a deposit of uranium in Nevada,
it’s the only one in the United States, and it’s our only access to that,
and for self defense we need this. Whereas, lets say in the Soviet Union,
the state is able to command that. And kind of a strange man,
of strange beliefs, got ahold of this uranium, and said,
“I will not sell this uranium to my government.”
He should not be forced by the government
(according to your philosophy) to sell that uranium?
Ayn Rand: But you realize, that you are setting up an impossible fantasy.
That is, if you are talking of any natural resource,
that is vitally needed, it could not become vitally needed if
it were that scarce.
Not scarce to the point where one man could control all of it.
So long as (I’m using your example) if a natural resource exists
in more than one place in the world, no one man is going to control it.”

Robert August 20, 2010 at 8:17 am

Mostly just agreeing with Khoth’s point, why can’t private investors just buy and store the helium if they have evidence the price will rise a lot? I can’t see anything the government is doing here to interfere with the market price (perhaps anti-price gouging or anti-speculator laws? but those aren’t mentioned here.)

email@isp.com August 20, 2010 at 9:05 am

Yes, helium is abundant in the universe. That has nothing to do with whether it’s abundant where we can get at it.

Mike August 20, 2010 at 9:11 am

If I had a gram of Actinium-227 for every time someone said we were going to run out of a commodity in 25 years, I’d have like half as much as I started with when we finally found out if it was true.

Master of None August 20, 2010 at 9:20 am

Industrial gas companies (Praxair and Air Products in the US) that run air-separation units regularly extract He from the atmosphere. It’s a co-product from their oxygen extraction process (i.e. it may not be economical to extract ONLY helium from the air, but it is economical to extract it if you’re already running the unit to get oxygen and other gases).

Anastasia August 20, 2010 at 9:36 am

What do we typically use helium for besides balloons?

lnm August 20, 2010 at 9:54 am

@Anastasia

It’s liquefied and used as a Cryogen for many purposed, because it’s so cold (~4K = ~450F) — it has the lowest boiling point of any element.

The physics lab I work in goes through a large dewar (100 liters?) every week or two.

It’s also used for MRI machines to make superconducting electromagnets that are necessary to create the high magnetic fields that MRI requires.

http://en.wikipedia.org/wiki/Magnetic_resonance_imaging#Cryogens

I think that there are, at least in theory, alternatives for keeping things cold, but the coming shortage is going to cause a mess one way or another.

The real problem with atmospheric recovery is that Helium that gets in to the atmosphere just floats up to space and escapes — you get a tiny amount that hangs around for a while, but that’s it. I’m not sure it’s possible to meet current demand with that method.

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

Bill August 20, 2010 at 10:10 am

Wait a second.

What’s wrong with this picture.

Person says you can buy helium today from the government at $3.00 and it will soon be worth $100.

No one is being stopped from buying it from the government at $3.00 and hoarding it to sell later but no one is purchasing it from the reserve to do so.

Someone has been smoking helium.

Bill August 20, 2010 at 10:25 am

The issue that is interesting here is how the government should sell the reserve.

1. What type of auction mechanism should it use;
2. Should it sell the entire reserve; break it into blocks so you get more bidders and more competitors in the aftermarket.
3. Should it use a second price auction.
4. Should it auction some now, some later, etc.

jk August 20, 2010 at 12:03 pm

His book should be titled:

End of the (insert mineral/element here) Economy 2.0 or 3.0.

Err August 20, 2010 at 12:26 pm

3H is relatively abundant on the moon. The closest place to get alot of 4H is Jupiter. Helium is so rare because Earth has neither the gravity nor the atmospheric pressure required to keep it in the atmosphere. He just floats off into space after enough time.

In terms of cryogens we are getting close to the point of having a superconductor that works with cooling from liquid nitrogen (70% of the atmosphere) There is tons of research into looking for strange alloys that can be “High Temp” superconductor. High Temperature is generally considered above the boiling point of liquid nitrogen -77 K (−196 °C; −321 °F) We are already seeing newer MRI machines with Bismuth-strontium-calcium-copper-oxide which only require liquid nitrogen.

kyle August 20, 2010 at 2:08 pm

In 25 years, as our sea levels rise, the heartland becomes a desert, and gasoline is $20 per gallon, I’m not sure that I’ll care how much helium balloons cost.

Kevin Postlewaite August 20, 2010 at 3:17 pm

Party balloons at $100 each? Nonsense- we’ll all switch to filling our balloons with hydrogen which makes them much more exciting anyway.

-Kevin

Tangurena August 20, 2010 at 4:16 pm

>why can’t private investors just buy and store the helium if they have evidence the price will rise a lot?

You cannot hoard helium because of simple physics.

The molecules of helium are so small that they slide between the molecules of whatever container you try to hold it inside of. It takes a large amount of energy to keep helium liquid, and while solid helium theoretically exists, no one has managed to get anything cold enough (within a fraction of a degree of absolute zero) to make solid helium on Earth.

Helium is so un-reactive with everything else that there is no way to make some chemical that can store it.

Hydrogen is similar – tiny atoms that don’t like to stay where they are put. Which is why any hydrogen fueled vehicle will leak fuel while it sits in the driveway. Expect scenarios like: you fill your hydrogen car up on Monday, park the car in your driveway and maybe as long as 2 weeks later the fuel tank will be empty.

Bill August 20, 2010 at 4:37 pm

OK, since you can’t store helium, why can’t the government sell options and futures that are assigned to the purchaser of the business, thereby getting reflected in the purchase price?

In looking at the articles, it looks like the government reserves are a buffering mechanism in the industry, meaning that producers do not need to have reserves to deal with fluctuations in demand because there is always a seller with reserves.

This just means buyers will cover with reserve insurance…long term supply contracts, options to purchase. The spot purchaser may bear more risk.

Michael Cain August 20, 2010 at 11:25 pm

“What do we typically use helium for besides balloons?”

A small number of current fission reactors in various global locations use helium as a coolant. Several Generation IV fission reactor designs also propose using helium as a coolant. If such designs are deployed on any sort of scale, it would be a potentially large new use for the gas.

David Wright August 21, 2010 at 3:36 am

“What do we typically use helium for besides balloons?”

Helium is also used in gas leak detectors for all sorts of industrial and scientific applications. You introduce some heium into the chamber you want to test and move a tube hooked up to a mass spectrometer around outside it where you suspect there might be a leak. The mass spectrometer is hooked up to a siren that gets louder in proportion to the amount of 4He detected. In a setup like this, you want a gaseous element that is very rare (so you are sure that what you detect is coming from a leak) and very inert (so it is safe for humans and doesn’t interfere with whatever process should occur in your chamber) and disperses quickly (so you can be sure the signal is coming from where you are holding the tube right now); helium fits the bill perfectly.

vt August 21, 2010 at 2:56 pm

“helium is the second most abundant element in the universe and it accounts for 24% of the mass of our galaxy, according to Wikipedia”

it’s about time we start mining operations on the Sun

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