Newspaper article International Herald Tribune

Helium Prices Seem Headed for Stratosphere

Newspaper article International Herald Tribune

Helium Prices Seem Headed for Stratosphere

Article excerpt

The market value of refined helium has nearly doubled over the past five years as the world seemingly runs short of the second most abundant element in the universe.

The values of gold and silver have dropped like a stone in international trading markets. Coffee futures are hovering near a three-year low. But the price of one commodity has been rising as if it were lighter than air -- and in this case, well, it is.

The market value of refined helium gas has nearly doubled over the past five years, even as the Standard & Poor's benchmark commodities index, the GSCI, has fallen some 20 percent.

It is not a bubble. That is because the price has been driven up less by speculation than by old-fashioned fundamentals: There is more demand for the gas than ever and supply has not been able to keep up.

The world, it seems, is running short of the second most abundant element in the universe -- and that is creating a major problem in a wide array of businesses.

The gas has an extraordinary number of biomedical, industrial and national security uses, playing critical roles in the production or operation of MRI machines, fiber-optic cables, flat-screen TVs, semiconductors, space launches, welding, military surveillance, air- to-air missile guidance and much else.

For many of those uses, moreover, there are no known substitutes. Helium's low boiling and melting points, the lowest of any element, make it ideal for cryogenic applications. And as the second- lightest element, behind hydrogen, it is great for lifting things, from weather balloons to national-security dirigibles.

While abundant in the universe writ large, however, helium is not easy to capture. Much of the helium on earth leaks into space, and with only 5.2 parts per million in the air, it is not economically feasible with current technology to extract the stuff from the atmosphere. Instead, most of the helium that is sold on the market originates in natural gas fields underground and is salvaged as a byproduct of natural gas. Even then, only a handful of fields have a high enough concentration of helium to make extracting it financially worthwhile.

What makes this market saga particularly quirky, though, is the role played by the U.S. government. For much of the 20th century, the government had a domestic monopoly on the production of helium, which was used for airships, missile guidance and other national security measures. In 1960, it began a program to stockpile the helium it was extracting in an underground reservoir near Amarillo, Texas, amassing a debt of $1.3 billion in the process.

When, in the mid-1990s, lawmakers decided to pay down that debt, the government gradually started to sell off its helium holdings. But Congress made some odd decisions in that regard.

Typically, when the government wants to sell a public resource or asset to the private sector -- as with the wireless spectrum -- economists advise holding an auction so taxpayers get the highest price that the market will bear. …

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