Shortage of helium causes a wide range of problems


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For a chemical element known for its stability, helium has been disrupting many businesses lately.

Balloon artists can't promise wedding reception displays that float until the last dance. Scuba divers have to cancel expeditions because the gas isn't available to sustain them. And distributors hustle in secret to suppliers offering the slightest amount in what suddenly feels like a black market.

Why? Helium -- second only to hydrogen on the list of the universe's most common elements, the noble gas that has always occupied top-right real estate on the periodic table -- is in short supply.

Business owners who use helium across the region -- and it's about as diverse a group as you can imagine -- describe the same events over the past few months: dwindling amounts from suppliers, increased costs that are passed on to the customer and a fear that legislation isn't leading to a solution anytime soon.

PG graphic: Helium prices
(Click image for larger version)

The shortage is so severe that distributors are prioritizing medical clients who need helium for medical imaging while deflating shipments to their most visible customer: balloon shops.

"We've been able to beg and borrow to try and get any helium to keep our customers supplied," said Lee Rosenhamer, vice president of safety and compliance at the Butler Gas Products Co. in McKees Rocks. "But we have had to turn some people off completely."

Helium deliveries now come as "a dribble here, a drab there," Mr. Rosenhamer said. His company will send drivers "wherever we have to go" to pick up supplies -- but Mr. Rosenhamer refrained from saying where exactly for fear that competitors will learn who has the goods.

The shortage of the gas has its origins in Cold War Washington, when the U.S. government monopolized the element's industry when it began buying helium for military and aerospace development. Much of the country's helium supply is still kept in a Texas reservoir that connects to pipelines in Kansas.

That reservoir, which holds about 30 percent of the world's helium supply, could run out by 2020, according to Congressional testimony given in May by Walter Nelson, director of helium sourcing for Air Products and Chemicals Inc. in Allentown.

Congress tried to anticipate the shortage when it privatized the helium program in 1996, but has found that private companies didn't take to helium production as fervently as legislators hoped. A new plant is expected to open in Wyoming later this year, but it isn't online yet. Producers most often extract helium from natural gas.

The lack of private producers and the dwindling national reservoir mean a minor glitch at a major helium production facility can disrupt a precarious global supply chain, and the depressed supply has resulted in severe price spikes.

For fiscal year 2013, the price of helium hit $84 per Mcf, up from the $75.75 seen in 2012.

Suppliers now give top priority to clients who use helium for medical purposes such as MRIs, said Randy Weaver, who works at the Matheson Gas transport facility in Greensburg. Clients who use it for "non-essential" purposes move to the bottom of the delivery list.

At Balloonatics! in Squirrel Hill, that has translated to an increase in balloon prices and worries among customers that bar mitzvah displays and wedding arrangements won't fly as high for as long.

About two years ago, owner Tracie Stivason's supplier added a 50 percent surcharge to helium costs in anticipation of the price increase. Ms. Stivason increased balloon prices 25 cents to account for the additional cost, charging $1.25 each for an 11-inch latex balloon.

A painter who runs out of oils may try acrylics. A balloon artist who runs out of helium turns to its heavy-set stepbrother, nitrogen.

Ms. Stivason started building balloon sculptures with nitrogen-filled pieces, which don't float but instead rely on a design architecture to take shape. One is a giraffe that premiered last week and retails for $65 -- Ms. Stivason has already sold two.

Other competitors haven't adjusted as well. Ms. Stivason fields calls from customers who think her shop is out of helium after they have been turned away at some Giant Eagle and dollar store balloon stations.

She still gets helium delivered -- eight tanks a week now instead of the usual 10 from her supplier.

The shortage creates uncertainty in business operations.

"It's almost a daily call of: Where do you have it and where can we get it?" said Mr. Rosenhamer at Butler Gas. Even though some analysts expect the shortage to ease in the fall, Mr. Rosenhamer said major suppliers aren't making commitments on shipments.

Business owners trying to find their next helium fix work a stretched market that varies from state to state.

Mike Convery, a co-owner at the Pittsburgh Scuba Center in Homestead, called suppliers in Pennsylvania, Michigan and Wisconsin to try to find helium to use on a dive trip to see shipwrecks this weekend at the Thunder Bay National Marine Sanctuary on Lake Huron.

The dive was cancelled.

He could have dived with a tank using nitrogen, but the high pressures of the deep sea can lead to nitrogen narcosis, a physical sensation that mimics getting drunk. Lacing a scuba tank with helium relieves the pressure of the gas and is more quickly processed by the body.

Mr. Convery increased helium prices at his shop from 60 cents to $1 per cubic foot, but is focusing on making money from scuba training and not planning any deep dives until a supplier pulls through.

"There's a place in New York that has some," he said. "But they have laws about transporting gas across state lines."

businessnews

Erich Schwartzel: eschwartzel@post-gazette.com or 412-263-1455. First Published August 5, 2012 4:00 AM


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