Pharos-Tribune

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November 22, 2012

Slate: Macy's parade contributes to loss of helium supplies

(Continued)

The source of the helium we use now was discovered in 1903 in Dexter, Kan., when drillers happened upon gas that didn't burn. They were disappointed, but chemists eventually studied the gas and realized that natural gas deposits in the United States often contain helium in single-digit percentages. As it turned out, the Great Plains was hiding enormous amounts of helium, and the United States quickly became, and remains today, the world's biggest supplier of helium. Many uses were found for the gas — in particular, lighter-than-air travel. In 1925, the United States created the National Helium Reserve to ensure our dominance in the zeppelin wars that were sure to come. (The Hindenburg was filled with the very flammable hydrogen rather than helium because the United States controlled helium supplies and was loath to provide the gas to Germany.) In 1960, demand for helium increased, so Congress created incentives for natural gas producers to sell their helium to the helium reserve. This helium has been stored by the Bureau of Land Management in giant underground caverns in the Texas panhandle to this day.

By 1996, the BLM had a large amount of helium, but the agency was also $1.6 billion in debt. To offset that debt, the Helium Privatization Act was passed to sell the government's reserve to private companies. Unlike the strategic petroleum reserve that is maintained for emergencies, the helium reserve was seen as a financial burden.

The solution was to sell it off as fast as possible. The price was determined by dividing the existing debt by the remaining volume of helium. It wasn't chosen by assessing supply and demand, but was based on recouping the cost of running the BLM facility. This is analogous to digging up gold in your backyard then selling it at a price sufficient to pay for the shovel you used.

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