A helium discovery in Tanzania might have come just in time.
Where are we going? To how the market rescued helium.
Why We Need Helium
As a liquid at minus 452 degrees Fahrenheit and as an inert gas with tiny atoms, helium is a handy coolant, good for discovering leaks, and useful with combustible fuels. An invisible necessity (except for balloons), helium is in MRI equipment, superconductors, rocket fuel tanks, and even helps with supermarket barcodes. When there was a chance we could have a helium shortage, someone suggested banning helium balloons because its other uses were so crucial.
Helium Markets
For a long time we’ve known that helium is special. After deciding it had military value during the 1920s, the U.S. government set up a National Helium Reserve and also restricted what private firms could export.
However, with government in control, helium prices created problems. Sometimes the Reserve paid too much for helium and generated a sizable debt. But also, when they sold the helium at too low a price, its buyers wanted more while producers extracted less. One result of too much quantity demanded and too little supply is a shortage.
Below you can see when the government price was far below the market:
Our Bottom Line: The Power of the Market
Looking back, we can see that government ignored the market’s ability to create desirable incentives for helium production. Through new legislation in 2013 though, the price of the government’s reserve helium has been determined by the market.
You know what happened. As price went up, so too did the incentive to produce more.
And that returns us to Tanzania.
Our sources…Through articles on helium that included the Guardian, the BBC, NBC News, Priceonomics and this textbook, I discovered a surprisingly vast supply of analysis about helium markets. Taking the next step, I also recommend checking the impact of the helium discovery on Tanzania and its economy.
