Monday, August 26, 2013

What a gas!

     This story is why I still love my job. On Monday morning I knew basically nothing about helium. Then my boss said, "write something about the helium cliff" and the next thing I knew I was talking to a range of people from Boeing to Loyola University Medical Center, from the U.S. Senate to a balloon company, plus of course reading up on helium. It may be the ideal news story, for me, a blend of both bumbling by Congress AND details about one of the more interesting elements. 

     Helium is the second-most-abundant substance in the universe; roughly 23 percent of the mass of everything that exists is helium. So it reflects a certain perverse genius on the part of the U.S. Congress that it has managed to blunder us into a looming helium shortage.
     This issue is nothing new — industries that use helium, of which there are a surprising number, from aerospace to medicine to party balloons — have been dealing with supply problems and price spikes for years.
     “There’s tons of it on Jupiter,” said Christine Doolin, co-owner of Doolin Amusement Supply, 511 N. Halsted, which sells tanks of the noble gas, or tries to. “We don’t get as many tanks as we want, and haven’t for a year and a half.” She said that a large tank that sold a few years back for $95 now costs $200, and so her customers are using less.
     The immediate crisis — some call it the “helium cliff” — is this: the U.S. government, through its Federal Helium Reserve, supplies roughly half the helium in the United States and a third of the world’s.
     That spigot will turn off, completely, on Oct. 8, thanks to a well-intentioned but operationally disastrous law designed to force the government out of the helium business so private industry could take over. The Helium Privatization Act of 1996 compels the United States to sell off its reserves and exit the market as soon as it recouped the $1.3 billion it managed to lose selling helium, primarily because it set the price too low (which also is what kept other players out of the market). The assumption was that other suppliers of helium would crop up by the time the debt was paid. But strong demand, coupled with the feds raising the price, trying to spur others to supply helium, meant that the debt was eliminated early, in the fiscal year ending this Sept. 30. Which means, by law, the helium flow stops a week later.
     "We want to emphasize the urgency of the situation," said David Isaacs, vice president of government affairs for the Semiconductor Industry Association in Washington, D.C., representing the $150 billion American industry. "There is a lot of talk about deadlines in Washington, but this is a real deadline. If this reserve was to go offline, it would create problems."
     A variety of local companies would be adversely affected. Medical image scanners account for a third of the helium market.
     "We do have concerns," said Dr. Scott Mirowitz, chairman of radiology at Loyola University Health System, which operates nine MR scanners. "There's quite a bit of helium in MR scanners." Super cold helium keeps the powerful magnets cool. Shortages would mean the $2 million machines couldn't be operated without risk of damage or inaccuracies.
     Boeing uses helium to test for leaks in fuel tanks and to heat-treat landing gear parts.     
     "Because of the importance of refined helium to the U.S. economy, Boeing shares the concerns that industrial and government users have expressed about a potential disruption to the global supply of helium," said Angie Yoshimura, a Boeing spokeswoman. "Steps should be taken by Congress to reauthorize funding to operate the Federal Helium program to ensure a smooth transition over the next several years to a full-commercial marketplace for helium."
     Hope seems justified. The House has passed a law to buy more time. The Senate Energy and Natural Resources Committee passed its version in June. And the expectation is that the Senate will race to act in September when it returns from its break.
     "The good news is that Congress has given every indication that it wants to prevent this helium cliff," said Keith Chu, press secretary for the Senate committee.
     One response could be relief. Or you could use this as a cautionary tale of what happens when government runs markets—though the United States entered the helium business in 1925 when there wasn't one, and it worked well for decades. The government's reserve is still the only significant long-term storage facility for crude helium in the world.
     The bad news, in my view, is that this crisis ever loomed, and what it says about our leaders. Even if we dodge this bullet is no occasion for self-congratulation. Our government should function better than this.
     In 2010, the National Research Council did a study to examine what effect the U.S. government shutting down its helium operation would have on industry, and concluded that its exit would be so disruptive that, for the first time, the United States would become an importer of helium from the two regions that have stepped up their helium production.
     Those two regions are Russia and the Middle East.

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