A Look At Rising Helium Prices

Nobel laureate Robert Richardson has been arguing for years that the price of helium is too low. If the recent announcement about 2013 crude helium prices is any indication, the Bureau of Land Management may be taking notice.

Open Market Price of Crude Helium, 1998-2013On April 24, the Bureau of Land Management announced a nearly 11 percent jump in the price of crude helium. The BLM set the open market price for 2013 at $84.00 per thousand cubic feet (Mcf), up from $75.75 per Mcf. By comparison, the price for 2012 saw only a 75 cent per Mcf increase after jumping $10.25/Mcf the previous year.

“Getting a fair price for Federal crude helium is our obligation, and this year’s new pricing represents our commitment to that goal,” says Amarillo Field Manager Leslie Theiss.

The Helium Privatization Act of 1996 established a timetable for selling off the Federal Helium Reserve by 2015. As Richardson argues, the mandate to sell off helium means the price is dictated not by supply and demand but by the need for the government to recoup the money spent in establishing the helium reserve. “As a result of that Act, helium is far too cheap and is not treated as a precious resource,” Richardson told The Independent.

According to the BLM, the more recent pricing methodology is in response to recommendations from the 2010 National Academy of Sciences (NAS) report, Selling the Nation’s Helium Reserve. Until 2010, the BLM had been charging the minimum price established by the Helium Privatization Act, representing the cost of the helium rather than its true market value. The report suggests that selling crude helium at higher prices could facilitate “more rapid retirement of BLM facilities debt to the US Treasury—a central goal of the 1996 Act.”

2011 Helium ConsumptionIn Selling Off The Nation’s Helium Reserve, NAS projected a 2.6 percent increase in the price of crude helium every year through 2015. This would place the 2013 price right around $69.93/Mcf, and the price in 2015 at $73.62/Mcf. Instead, the increase since 2010 has averaged 6.4 percent per year. At this rate, the 2015 open market price of crude helium would be in excess of $95/Mcf.

Despite the fact that Richardson has been quoted as saying a party balloon should cost $100, he has testified before congress saying that “price shocks” can be damaging for users of helium. “For many scientists, losing access to helium, even temporarily, can have long-term negative repercussions for their research,” he says.

While some users may be able to find alternatives to helium—such as argon, in welding—other applications simply have no substitute. In Fiscal Year 2011, privately owned companies purchased more than 2 billion cubic feet of helium from the BLM, according to the U.S. Geological Survey. In domestic consumption, it is estimated that 32 percent of helium was used for cryogenic applications. The USGS notes that there is no substitute for helium in cryogenic applications where temperatures below -429 °F are required.

As prices continue to climb, helium users will look to distributors for answers. How are you responding to helium price increases and continued supply challenges?

Gases and Welding Distributors Association