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August 12, 2012

Deflating profits: Helium shortage a problem for local businesses

CULLMAN — Debra Chambers has watched for months as a portion of her business deflates faster than one of the helium-filled balloons she sells at her Guardian Angel gift shop.

As co-owner of the gift shop, which is based at Cullman Regional Medical Center, Chambers feels fortunate that the gas-inflated balloons are not the foundation of her business. But she is concerned for others who typically sell dozens of the balloons for parties and other events. A shortage of helium is affecting the United States, the leading producer of the natural gas byproduct, as well as the rest of the world.

Retailers like Chambers are powerless to do anything about the shortage. The naturally occurring gas is provided to users on a priority basis, with medical facilities at the top of the list, followed by industries and retailers. The shortage, which has been creeping up for months, is expected to stick around at least until next summer, said Samuel Burton, assistant field manager of  helium operations for the U.S. Bureau of Land Management in Santa Fe, N.M.

“A helium shortage in the past has been two or three months and never realized in the media; that’s because there was so much produced and sitting in reserve. We don’t have that now,” Burton said.

When Burton speaks of a helium shortage, he is referring to the available gas that has been refined for consumers. Huge reserves of crude helium still exist in the federal government’s Bush Dome grounds near Amarillo, Texas. Another 100-year reserve of crude helium also sits in Wyoming, near a refining plant that was on the way to going online until it was interrupted by fires in the region.

In fact, several factors came into play to cause the helium shortage. With the huge demand for cheap natural gas around the world, many producers of the gas ignored the helium byproduct for production and financial reasons. Several locations around the world that refine helium have also faced difficulties because of maintenance issues and political climate.

And even before those problems arose, Congress passed the Helium Privatization Act in the 1990s, a move aimed at turning over the industry to private companies. While companies have bought rights from the federal government, the private sector has been slow to initiate the necessary refineries for producing useable helium.

On the heels of those delays, the federal government sticks to scheduled maintenance and shut down its operations, Burton said.

For those who use helium, whether in a retail setting or as regional suppliers, the shortage is also evidenced by the high price for whatever amount is available.

Reviewing an invoice from July 2011, Chambers noted that she paid $80 each for two 200-cubic-foot cylinders of helium. The price today has nearly doubled and from what she understands will go even higher.

“I first heard of the problem six months ago. We would buy from AirGas, which has a supplier in Decatur. I received a letter from the company explaining that there is a shortage and that hospitals are a priority,” Chambers said. “I’m afraid this could put some retailers out of business that sell so many of the balloons for parties.”

While retailers are feeling the pinch from vanishing helium supplies, Holston Gases Inc. employee Wayne Halbrooks in Cullman said the helium shortage has vanquished about 10 percent of the local supplier’s business. The company is based out of Knoxville, Tenn.

The local Holston operator supplies helium mainly to area industries and, before the shortage, to some retailers.

“Helium’s probably going up more. And like a lot of things, I doubt it will ever come down again,” Halbrooks said. “We’ve been told a lot of maintenance is going on at the plants that produce helium, which means they’ve been shut down. And we know there is a lot being shipped overseas because of the growth that is going on in other areas.”

Halbrooks said price increases for helium have been significant, with the last one coming in at 20 percent.

“It’s put a real hurt on us. Helium was a big part of our business,” he said. “We’re trying to serve some of our longtime customers the best we can. We’re not able to take on any new customers for helium at this time, and probably won’t for a long time.”

In the meantime, available helium will remain a priority for medical facilities which need the gas for MRIs and other procedures. In industry, helium is used for a wide range of needs including the production of silicon wafers.

Congress is reconsidering many issues concerning helium and is in the process of hearing various arguments and facts concerning its production and availability.

* David Palmer may be contacted at dpalmer@cullmantimes.com or 256-734-2131, ext. 213.

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