Blog
Unit 1 Micro: Helium Shortage might be a Party Pooper
27th August 2012
How might recession in the natural gas mining industry cause tears for toddlers at birthday parties and pain for organisers of big events? The answer lies in the link between production of gas and the world price for a byproduct - helium. The recession has caused a fall in production in the natural gas industry in the United States and as a result, the supply of helium has fallen too. Fears of a global supply shortage of helium have driven prices sharply higher, the situation has been exaggerated by the possibke closure of the Federal Helium Reserve in Texas - a plant that supplies a third of the world’s crude helium.
The prices of lighter-than-air helium balloons has jumped in recent weeks, but helium has many more important uses than in making parties swing for young and old alike. It is crucial in the health-care, defence and high-tech industry operations.
It is used in silicon wafer manufacturing, in medical-imaging machines such as MRI scanners (which are cooled in part by liquid helium) and in the production of LCD screens and fiber-optic cables. Helium also is used in the arc welding industry and large helium balloons are used in the weather forecasting industry.
All of these industries face higher costs and deeper problems if the supply crisis is not addressed and helium becomes rationed.
“Ironically, helium is the second most abundant element in the universe. (Hydrogen is the most abundant.) It is just that helium is scarce on Earth.” (Guardian)
For those for whom no party is complete without a sea of helium balloons, the supply shortages create a knotty problem - helium now makes up about 60 per cent of the cost of a party balloon. Balloon lovers might have to switch towards substitutes (expect the demand for stick and air-fielled foil balloons to rise!) but for medical patients this is no laughing matter.
Reading:
Daily Telegraph: Party balloons at risk as helium prices go up
See also:
Why the price of helium is ballooning
Independent: Up, up & away! Helium shortage sends prices sky high
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.