Chances for helium bill floating away

Chris Spitzer
Aug 28, 2013

What’s going on with helium?

The Federal Helium Reserve, which supplies about half of U.S. demand, will turn off the taps on October 7th, 2013 unless Congress acts quickly to pass legislation to keep it up and running. The impact on the U.S. economy is expected to be immediate and immense, with price spikes and disruptive shortages for medical imaging (which uses a quarter of the supply), semiconductor manufacturing, scientific research, and children’s birthday parties.

How did we get here?

In 1960 the Reserve started borrowing money to cover its operations, but by the mid-90s it was in over a billion dollars of debt from construction and helium purchases. At the time, the private sector was selling helium cheaply and demand was moderate. So Congress decided to start a going-out-of-business sale at the Reserve to pay off the debts and get the government out of the helium supply game. The Reserve’s supply dominance allowed Congress to fix a price high enough to pay off the debt in a reasonable amount of time, and the plan became law in the 1996 Helium Privatization Act.

Unfortunately, the helium market has been far from inert since then. The tech boom led to more industrial demand in areas such as optical fiber manufacturing, and foreign demand has grown sharply since 2000. Helium prices from private sources, which began well below the federal price, drifted upward under pressure from the new demand. In 2007 private prices hit the federal price fixed in 1996, which then became the de-facto price of helium for the entire market.

In October, the Reserve will have paid off its debts and will no longer be legally allowed to operate, though it will contain plenty of helium. The combination of halved supply and the removal of the federally fixed price is the cause of the impending crisis of sharp price jumps and supply shortages -- the “helium cliff.”

What’s the solution?

A fix for the situation seems like it shouldn’t be a heavy lift. The National Academies published a report in 2010 that suggested keeping the Reserve open with changes that put the market on a glide-path to full privatization over the long term, including market-based pricing, improved reservoir management, and a program to protect critical users, like researchers, from potential price shocks. In addition to achieving Congress’s original aim of eventually shutting down the Reserve, the continued sales would generate $500 million in revenue, and the private sector would have time to build more capacity. A classic win-win-win.

These ideas have even found bipartisan support on the Hill, and there are two bills making their way through Congress. Though they differ in the details, both bills would keep the Reserve open for the next decade while transitioning to a fully private market. The House passed its version, H.R. 527, last April. Thanks in part to the noble work of several generations of Congressional Science Fellows in the Senate, a helium bill was introduced last year, and an updated version, S. 783, passed the Energy Committee this year. Unfortunately it has not been brought to the floor for a full vote, a necessary step before the two bills are reconciled and become law. With time on the floor at a premium when the Senate returns in September, it’s anyone’s guess as to whether Congress can act to finish up this bipartisan plan and keep the nation from falling off the “cliff.”

Photo by Kasuga Huang downloaded from the Wikipedia Commons, under a Creative Commons Attribution 2.0 Generic lisence. http://en.wikipedia.org/wiki/File:Modern_3T_MRI.JPG

Chris Spitzer

Chris is a AAAS Science and Technology Fellow in the State Department, and a former AIP/AVS Congressional Fellow in the office of Senator Jeanne Shaheen. Follow me on twitter.

Disclaimer

This blog does not necessarily reflect the views of AAAS, its Council, Board of Directors, officers, or members. AAAS is not responsible for the accuracy of this material. AAAS has made this material available as a public service, but this does not constitute endorsement by the association.

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Comments (3)

Judy Keen (not verified)
August 29, 2013 at 7:57 am
What can we do to help get the bill to the floor? Is it more effective to email or call our Senators?
Christopher Spitzer (not verified)
September 11, 2013 at 9:23 pm
It's always helpful to contact your Senators and Reps to let them know that their constituents care about an issue like helium. Many scientific societies, like APS, provide tools to help identify your reps in Congress: http://www.congressweb.com/apspa In addition, I'd suggest talking to people about helium to help spread the word, and continue to support your scientific societies -- it's their federal relations teams that do the heavy lifting to move Congress on these issues.
Kendra Zamzow (not verified)
August 29, 2013 at 9:44 pm
Very interesting. It's astounding the number of topics out there that Congress needs to act on that many of us never hear about.

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