Helium shortage leads to price increases

Industrial users report price increases and short supply

By Dave Hannon -- Purchasing, 12/10/2007 11:57:00 AM

A shortage of helium supply in the U.S. and other markets has producers pushing for price increases.

According to news reports, many of the worlds 16 helium extraction plants are not running at full capacity and the supply shortages don’t just impact the local party stores filling balloons. A recent story in the Wall Street Journal points out that scientific research has rapidly multiplied the uses of helium in the past 50 years. It is needed to make semiconductors, flat-panel displays, fiber optics and to operate magnetic resonance imaging, or MRI, scans and welding machines.

“U.S. helium demand is up more than 80% in the past two decades, and is growing at more than 20% annually in developing regions such as Asia,” the Journal reports.

In a recent story in the Charlotte (N.C.) Observer, Gary Pielak, a UNC Chapel Hill chemist who uses helium to cool nuclear magnetic resonance equipment, said he spends $6.60 for a liter of liquid helium that cost $4.50 two years ago. "If we don't have helium our magnets don't stay cold." he said. "And if our magnets don't stay cold they don't remain superconducting. And if they don't remain superconducting, well, we are out of business."

One-third of the world’s supply comes from the U.S. Federal Helium Reserve outside Amarillo, Texas. The reserve is finite, however, and some estimates say it will run out in a decade, cutting off a major percentage of the world’s helium supply.

Leslie Theiss, manager of that reserve, told the Chicago Tribune recently, “We’re pedaling as fast as we can here, but we just can’t produce enough. One-third of the world’s helium comes from our little place here. That’s kind of frightening.” 

Industrial gas supplier Praxair issued a 15-30% helium price increase for 2008 in response to “escalating energy, logistics, and other operational costs as well as current supply/demand imbalances” according to a company statement. Praxair also issued a 10-20% price increase for nitrogen, oxygen, argon, hydrogen, and carbon dioxide in 2008.