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November 22, 2012

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

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Since the United States is the biggest supplier of helium globally, the market value for helium has been artificially lowered. While some other countries (Canada, Russia, and Algeria) produce helium, they collectively supply only 22 percent of global demand. When the act was first passed, the price set was close to double the market price. The stock was not depleted, and in fact, a 2000 report by the NAS concluded that everything was going fine and that the price the BLM was asking was still above market value, writing, "Based on the information assembled for this report, the committee believes that the Helium Privatization Act of 1996 will not have a substantial impact on helium users," in part because "[s]ince the mid-1980s, there have been no drastic increases in the price of helium and no shortages of supply." But then global demand increased and the price tripled by 2008. U.S. consumption actually decreased, but that was more than offset by increased use abroad — primarily in Asia for semiconductor and fiberoptics industries. The market bought just about every cubic foot of helium the reserve would ship, and more than half of the reserve has been depleted.

In 2010, the NAS issued a new report that detailed the slow-moving disaster, concluding that the law "could amount to a taxpayer-financed subsidy for consumption of this scarce publicly owned resource." The reserve was being tapped too quickly, supplying one-third of world demand. Worse, since the price of helium from the reserve is so low, companies are discouraged from purifying helium because they can't get a fair price for it. Natural gas companies have little incentive to invest in the equipment and energy necessary to purify it, especially when the helium concentration is low-so the helium is being lost to the atmosphere.

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