The Economics of Everyday Things – Episode 72: Helium

Hosted by Freakonomics Network & Zachary Crockett

Introduction

In Episode 72 of The Economics of Everyday Things, journalist Zachary Crockett delves into the intriguing world of helium—a gas most commonly associated with party balloons but possessing a multitude of critical applications. This episode uncovers the economic, scientific, and geopolitical facets of helium, highlighting its indispensable role in various industries and the challenges surrounding its supply and sustainability.

The Magical Properties of Helium

Sophia Hayes, a professor of chemistry at Washington University in St. Louis, sets the stage by emphasizing the wonder of helium:

[02:21] Sophia Hayes: "Imagine going back to a time before balloons and that you brought out this object that would float in the air. It's magical no matter how you slice it."

Helium's unique characteristics make it both versatile and valuable:

• Noble Gas: Helium is one of only six naturally occurring noble gases, known for their stability and low reactivity. This inertness allows helium to be used in environments where chemical reactions must be minimized.

• Low Boiling Point: Helium remains a liquid at extremely low temperatures, making it an excellent coolant for superconducting magnets in MRI machines and other high-tech equipment.

• Lightness: As the second lightest element, helium is lighter than air, enabling applications ranging from balloons to advanced aerospace technologies.

Sophia Hayes further elucidates the origins of helium:

[02:46] Sophia Hayes: "Where that helium comes from is the decay of radioactive elements. And as they decay, they spit out an atom of helium... every time you see a balloon that's billions of years of the age of the earth undergoing that radioactive decay."

Diverse Applications of Helium

While helium's buoyant properties make it a staple at celebrations, its industrial and scientific applications are far more substantial.

1. Medical Industry: MRI Machines

Phil Kornbluth, president of Kornbluth Helium Consulting, highlights the medical sector's dependence on helium:

[07:07] Zachary Crockett: "Historically, that honor goes to the medical industry. In particular, MRI machines... each one holds an average of around $60,000 worth of helium."

Helium's role in MRI technology is pivotal. Its cooling properties enable the superconducting magnets within MRI scanners to function efficiently, providing detailed imaging of the human body.

2. Semiconductor Manufacturing

The semiconductor industry has emerged as helium's largest and fastest-growing market:

[07:50] Zachary Crockett: "In recent times, helium has found an even larger market in the semiconductor industry... every product that contains a semiconductor chip... benefits from helium."

Helium's inertness prevents contamination during the manufacturing process, ensuring the purity and functionality of semiconductor devices used in everything from smartphones to automobiles.

3. Aerospace and NASA

NASA stands as helium's largest single consumer:

[07:50] Phil Kornbluth: "Their largest single buyer is NASA, which uses it to cool hydrogen and fuel, pressurize rocket engines, and test for leaks in oxygen supply lines."

Helium is crucial for space missions, powering rocket launches and maintaining the integrity of critical systems under extreme conditions.

4. Everyday Uses: Balloons and Beyond

Although only a fraction of the helium market, balloons remain a familiar and symbolic use:

[05:48] Sophia Hayes: "So party balloons, blimps, all these things that we think of for lifting applications are extremely important also."

Helium-filled balloons, while seemingly trivial, represent the broad accessibility and cultural significance of helium in everyday life.

Helium Production and the Supply Chain

The journey of helium from the Earth's mantle to its various applications is complex and fraught with challenges.

Extraction and Processing

Beau Sears, CEO of Helix Exploration, explains the extraction process:

[13:43] Beau Sears: "Helium is produced just like natural gas is. It remains stored underground until you poke a hole in the ground to get it."

Helium extraction typically occurs alongside natural gas drilling in regions like Texas, Kansas, Oklahoma, and Wyoming. Companies extract helium as a byproduct, processing it through cryogenic methods to achieve the necessary purity levels for different applications.

Privatization and Market Control

Historically, helium production in the United States was dominated by government-controlled reserves:

[09:57] Zachary Crockett: "During this time, the price of helium was stable and fairly affordable for businesses that needed it. But in the 1990s, the government decided to get out of the helium business."

The Helium Privatization Act of 1996 marked the transition to a predominantly privatized helium market, with companies like Exxon Mobil becoming major producers.

Market Dynamics and Pricing

Helium pricing is highly volatile, influenced by supply disruptions and geopolitical factors:

[16:46] Phil Kornbluth: "It varies a lot based on where you are in the supply chain and what quantity you're buying under what contract term."

Bulk purchases are typically made in units of 1,000 cubic feet (MCF), with prices fluctuating based on market conditions. For example, a standard canister of 291 cubic feet may cost around $500, translating to approximately 80 cents per balloon.

Supply Chain Challenges and Shortages

The helium market is notoriously fragile, susceptible to various disruptions:

Historical Shortages

Phil Kornbluth outlines the history of helium shortages:

[17:42] Phil Kornbluth: "2006 to 2007 was helium shortage 1.0... Shortage 4.0 was early 22 through the end of 23."

Each shortage period has underscored the supply chain's vulnerability to factors like plant outages, accidents, and geopolitical tensions.

Geopolitical Influences

Beau Sears highlights the impact of international conflicts on helium supply:

[18:40] Beau Sears: "Geopolitically, helium is a hot button issue because half of the helium comes from Qatar and Algeria... Russia has a large resource that they are currently sending to China right now."

Such dependencies on foreign sources exacerbate supply risks, making the helium market sensitive to global political dynamics.

Prioritization During Shortages

During supply constraints, critical industries receive priority over less essential uses:

[19:08] Beau Sears: "Helium is very much a triage unit. The most important users, the MRI, chip manufacturing, fiber optics, those are the most high volume users of helium... balloon guys... often have to source their helium elsewhere."

This prioritization ensures that vital sectors like healthcare and technology maintain their helium supply, often at the expense of recreational and commercial uses.

Sustainability and Future Concerns

The finite nature of helium and its loss to outer space present long-term sustainability issues.

Exhaustible Resource

Sophia Hayes articulates the unsustainable trajectory of helium usage:

[21:52] Sophia Hayes: "There have been different estimates that at the rate of use, we may run out of helium one day... we are using it up faster than it's being replenished."

Helium's escape into space means that mined helium is essentially lost permanently, raising concerns about the longevity of its availability.

Recycling and Technological Innovations

Efforts to mitigate helium scarcity include:

• Recapture Systems: Developing systems to trap and recycle helium in applications where it can be reused.

• Efficient Usage: Advances in technology, such as more efficient MRI machines that use significantly less helium.

These measures aim to extend the utility of existing helium supplies and reduce waste.

Changing Consumer Behavior

Sophia Hayes suggests a cultural shift in helium usage:

[22:52] Sophia Hayes: "Balloons should be a luxury item rather than a common item... if you looked at that balloon and realized how incredibly magical it is... that's a pretty amazing thing."

By valuing helium more consciously, society can help preserve this precious resource for essential uses.

Exploration and Future Supply

Beau Sears emphasizes the ongoing efforts to discover new helium reserves:

[20:34] Beau Sears: "In order to fill the void, we need to find more molecules. And the only way to do that is to explore for it. And that's what we're doing."

Helix Exploration and similar firms are actively searching for untapped helium deposits, employing geological expertise to identify promising locations. However, helium exploration remains risky and capital-intensive, with no guarantees of finding economically viable sources.

Conclusion

Helium, a seemingly simple gas, plays a crucial role in modern technology, healthcare, and even space exploration. Its unique properties make it irreplaceable in many applications, yet its supply is precarious and subject to numerous challenges. As demand continues to grow, particularly in the semiconductor industry, the economic and environmental sustainability of helium becomes increasingly urgent. Addressing these issues requires a combination of technological innovation, strategic exploration, and mindful consumption to ensure that helium remains available for the critical needs of the future.

Notable Quotes

• Sophia Hayes on the magic of helium:

  [02:21] "Imagine going back to a time before balloons and that you brought out this object that would float in the air. It's magical no matter how you slice it."

• Phil Kornbluth on industry priorities:

  [19:08] "Helium is very much a triage unit... balloon guys... often have to source their helium elsewhere."

• Sophia Hayes on sustainability concerns:

  [21:52] "We are using it up faster than it's being replenished... that's an unsustainable situation."

Additional Production Credits

• Produced by: Zachary Crockett and Sarah Lilly
• Mixed by: Jeremy Johnston
• Assisted by: Daniel Moritz Rabson

For more episodes and to explore the hidden economic stories behind everyday items, visit Freakonomics.com.