Shortage of Helium causing problems for several industries

SALT LAKE CITY — A slowdown in sales of party balloons isn't normally an important economic indicator, but it may be the tip of an iceberg of trouble.

A helium shortage that started in May is stretching on much longer than expected and has now been labeled a "crisis" by federal officials.

"My phone has been ringing off the hook," said Samuel Burton at the Federal Helium Reserve, operated by the U.S. Bureau of Land Management in Amarillo, Texas. He said a "scramble" is under way to maintain healthy supplies of the gas for critical uses in the military, industry, even in medicine.

According to Burton, the shortage is due to many factors involving everything from last winter's warm weather to plant-maintenance issues in Algeria to a wildfire in Wyoming.

The shortage is ironic because helium is the second-most common element in the Universe. On Earth, it's captured as a waste product in natural gas fields.

Another irony is that most people will only notice the shortage of helium in its most frivolous use — balloons. The shortage, though, is serious and has potential effects on important sectors of the economy.

"Pretty much anything that's a high-tech industry," Burton said, "there's probably helium in its manufacture somewhere."

Brooke Barlow was oblivious to the helium shortage as her mother bought a clutch of helium balloons for Brooke's 5th birthday. "I think they're pretty important," Staci Barlow said as she walked with her daughter. "They make it so much more fun."

She bought the balloons at Zurcher's Party & Wedding Store in Salt Lake City, one of 11 party stores owned by Nick Zurcher in Utah and Idaho.

"For me, helium is very important to me," Zurcher said. "It's our business."

Zurcher still gets enough helium deliveries to serve customers most of the time. But his stores in Utah tend to run out near the end of each week. That's the part of the week when many customers want helium balloons.

"Some weeks (the suppliers) are able to give us all the helium we need," Zurcher said. "And then the next week we might be a little short."

The balloon business constitutes less than 1 percent of the helium market. As shortages have lingered, helium suppliers are giving priority to bigger, more important customers.

The Federal Helium Reserve currently supplies 42 percent of the nation's helium and about one-third of the world's demand. The gas is used in welding, lasers, manufacturing, and even in imaging equipment such as MRIs in the health care industry. It also plays a vital role in laboratory operations and the space program.

The U.S. Navy began storing billions of cubic feet of helium in the Federal Helium Reserve decades ago at a time when dirigibles and barrage balloons were major military assets. In 1996, Congress passed the Helium Privatization Act that gave the BLM management authority over the helium reserve. The agency was directed to begin selling the gas to private industry, a move aimed at paying off $1.3 billion in debt associated with the helium reserve.

Although some critics believe BLM practices have caused or contributed to the shortage, Burton said that is not true.

"Actually, since 2003 we have been selling, offering for sale, 2.1 billion cubic feet of helium," each year, he said.

The shortage results primarily from rising worldwide demand, coupled with short-term difficulties at helium plants around the world, Burton said. A set of talking points issued by the BLM states, "The current crisis can be traced to maintenance issues at plants in Qatar, Algeria, Australia."

Even a Wyoming wildfire this year played a role by slowing construction of a helium plant, Burton said.

Last winter's warm weather also was a factor, he said. Lower demand for heating led to reductions in natural gas production and, consequently, less helium was recovered at the wellheads.

An industry insider who asked to remain anonymous said he believes U.S. helium suppliers bear part of the blame. "Some companies," he said, "are selling it overseas because they get a premium price for it."

In any case, it appears the shortage will not end quickly. According to the BLM's talking points, "The present acute shortage is expected to continue through late 2013 until new supply sources come online in the U.S. and overseas."

Until then, the BLM document said, some U.S. companies are cutting back deliveries of helium to customers "by 10 to 15 percent from originally contracted amounts."

Some suppliers have cut off deliveries entirely to balloon businesses.

Zurcher said he's lucky he's had to deal with only minor reductions. He doesn't begrudge the fact that priority is given to more important helium users.

"I understand that health care needs it," Zurcher said. "And I think that's good."

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