Helium shortage? Bureaucrats, firms are creating too little hot air.

Helium shortage is raising prices for everyone from physicists and hospitals to retailers of Mylar balloons. But it's not supply and demand that's caused the helium shortage, it's a botched public-private handoff of responsibility.

By , Staff writer

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    Great Park Balloon pilot Matt Williams, left, finishes putting on the mouth for the attraction's seasonal Jack-O-Lantern makeover, Monday, Oct. 1, 2012, in Irvine, Calif. Helium-balloon enthusiasts and racers are having to pay higher prices or swtich to hydrogen because of a global helium shortage.
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Helium may be the second most abundant element in the universe, but it's becoming increasingly scarce here in the United States, which is raising prices worldwide for everyone from physicists to computer chipmakers to mylar balloon vendors.

And because the US supplies 75 percent of the world market for the stuff, the helium shortage has become a global problem.

But the supply-demand imbalance isn't coming from market forces, it's a public-private vacuum. The federal government is getting out of the business after more than eight decades, and so far private industry hasn't stepped in to fill the void.

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The result: a shortage of hot air that may last until sometime next year.

There are no reports that the helium shortage has caused any huge crises. Hospitals, which use liquid helium to freeze the magnets in MRI scanners, are still getting supplies. So are arc welders and particle physicists.

Balloon racers are switching to hydrogen. Helium balloon retailers are raising prices. And the University of Nebraska, which last month filled only half the usual 5,000 red helium balloons it normally releases at the beginning of football season, has put its seven-decade tradition on hiatus.

The US holds an even more dominant role in helium than Saudi Arabia does in oil because natural gas fields in Texas and Kansas have an unusually high concentration of helium. Natural gas production is currently the only way to profitably extract the lighter-than-air gas. Canada, Russia, Qatar, and Algeria are among the only other helium producers in the world.

Considered a critical resource, the US government has been extracting the element since 1929, when it built a helium extraction and purification plant in Texas, and later maintained a helium reserve. But in 1996, Congress passed the Helium Privatization Act, which aimed to get private industry to take over from the government in supplying helium to the marketplace.

The Federal Helium Reserve has been raising prices to pay off the debt it incurred decades ago to build its helium plant. But the reserve is dwindling and the federal government will be forced to cut back supplies after 2014. It hasn't helped that natural gas production is also down because of low prices.

Private firms were supposed to fill the helium vacuum. But new plants in Qatar and Russia aren't expected to come online until next year.

A Wyoming natural gas plant, which was due to open last year and supply 10 percent of the world's helium, has been delayed by a host of issues. It's owner, Denver-based Denbury Resources, recorded a pretax $4 million charge in the second quarter related to the delay and does not expect the plant to open until "near the end of 2012."

So the man-made helium shortage looks likely to continue for the months ahead, even in the Saudi Arabia of hot air.

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