Helium shortage causes prices to balloon

Helium is an abundant element that's vital to high-tech products. But slack production is causing a shortage, and that has helium prices ballooning.

If helium is the second-most abundant element in the universe, why is there such precious little of it to go around here on planet Earth? We've seen helium-production shortages in recent years, but lately prices have been rising like never before.

The current shortfall has now dragged on much longer than expected, and it's beginning to spoil the party -- quite literally.

Mark Hannan hasn't seen profits escaping like this in his 16 years of running Balloon Express, a party shop near Cleveland, Ohio. He weathered the great recession in large part, he thinks, because balloons were cheaper than flowers. But the uncertainty over helium supplies has changed that equation.

"Even in a down economy, we were always busy," Hannan says. But now, with the helium shortage, he's worried he won't have enough helium to fill the orders he's booked through November.

As recently as six months ago, Hannan sold balloons for around $12 a dozen. Now, that price has tripled, and he says he's getting some strong reactions. Among the things customers have been asking him: "Are you crazy? What do you mean, $36? What else do I get with it?"

Consider that party balloons account for less than 1 percent of helium demand, and you've got the makings of a global crisis. Sam Burton tracks supplies at the Federal Helium Reserve, a government stockpile maintained by the U.S. Bureau of Land Management outside Amarillo, Texas. Burton says industrial demand for both the gas and liquid versions of helium keeps growing.

"It's used in computer chip manufacture, cell phones, fiber optic cables, laser production. If it's high tech, helium's in there somewhere in its production," Burton says. "It's vital." It also keeps the inner workings cool on everything from MRI machines in hospitals to guidance systems in missiles. It's used to purge rocket engines. In the past week, Western Digital announced new helium-filled computer hard drives will allow larger storage capacities.  

Burton says supply just isn't keeping up with all that demand, even though helium can be captured as a waste product from natural gas fields. Since natural gas prices are at historic lows, Burton says producers are less interested in doing that.

At Pennsylvania-based Air Products and Chemicals, John Van Sloun says some new helium plants are scheduled to be started up in the next year or so, and that should help alleviate "some of the tightness in the marketplace." But in the meantime, analysts say prices are bound to keep rising -- just like those balloons.

Kai Ryssdal: I'm not really gonna set up this next story, as much as I am gonna give you a hint of what it's about. A certain plentiful yet much in demand natural resource has been seeing shortages the past couple of years...and prices rising like never before.

Our senior business correspondent Bob Moon reports.


Bob Moon: Call it a ballooning crisis. Mark Hannan hasn't seen his profits escaping like this in 16 years of running Balloon Express, a party shop near Cleveland, Ohio. He weathered the great recession in large part, he thinks, because balloons were cheaper than flowers. But the uncertainty over helium supplies has changed that equation.

Mark Hannan: Even in a down economy, we were always busy. And now with the helium shortage, I don't even know if the orders I've got booked until November I'm going to have helium for.

As recently as six months ago, he sold balloons for around 12 bucks a dozen. Now, that price has tripled, and he's getting some strong reactions.

Hannan: Are you crazy? What do you mean, 36 dollars? What else do I get with it?

Consider that party balloons account for less than 1 percent of helium demand, and you've got the makings of a global crisis. Sam Burton of the Federal Helium Reserve, the government's stockpile, says that's because industrial demand for the stuff keeps growing.

Sam Burton: It's used in computer chip manufacture, cell phones, fiber optic cables, laser production. If it's high tech, helium's in there somewhere in its production. It's vital.

Burton says supply just isn't keeping up with all that demand -- even though helium can be captured as a waste product from natural gas fields. But natural gas prices are at historic lows, so Burton says producers are less interested in doing that.

At Pennsylvania-based Air Products and Chemicals, John Van Sloun says help is on the way, but it may take a while.

John Van Sloun: There are some new plants that are scheduled to be started up in the next year or so which will certainly help alleviate some of the tightness in the marketplace.

Meantime, though, analysts say prices are bound to keep rising ... just like those balloons.

I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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