Tim Parker, Business Manager of Hydrogen/Helium at Airgas, was on hand at the IBA Annual Conference on September 23rd to explain the reason for the recent helium price increase imposed by the Bureau of Land Management (BLM). 

Tim explained that because the BLM is responsible for administering the Department of the Interior's Federal Helium Program they must follow the intent and requirements of the Federal Helium Privatization Act of 1996 (Act). The Act established a minimum pricing for the helium based on a calculation that would retire the program's total debt to the US Treasury by 2015. BLM has been charging the minimum price established by the Act, a price that represents the cost of the helium not the value on the open market. It is because of this debt to the US Treasury, BLM has revised its methodology for calculating the price of the crude helium offered during its yearly Open Market Sale. As a result, Federal Crude Helium will be sold at $75 per thousand cubic feet in 2011 as compared to $64.75 in 2010. This price covers helium debt repayment and interest and includes administrative and storage costs.   

The increase of 15.8% in the cost of crude helium will likely result in an increase in your cost of helium gas delivered to your place of business. There will be many variables affecting that price increase such as current price paid, increase received by your vendor, and where the increase is applied but ultimately the cost increase should result in no more than a few pennies per balloon.

Cheryl Sinclair of Airgas Retail Solutions provided the example below using a standard 219 cf cylinder @ .365 cents per cubic foot to calculate the average increase:

Current price per cf .365 x 219 cf = $80

•  $80/480 18" foil balloons = current cost of helium per balloon .166 cents

+ 10% increase per cf = .401 x 219 cf = $88

• $88/480 18" foil balloons = new cost of helium per balloon .183 cents

Difference in cost +.017 cents per balloon

As Cheryl explained, the variables will differ based on your current supplier pricing and structure resulting in price increases that could be lesser or greater than someone else's. Overall the recent increase in the cost of crude helium should not have a tremendous effect on the price of balloons at retail.

The BLM is currently legislated to operate through 2015 with 10-15 years of reserves on hand. The crude helium suppliers that currently feed the pipeline are seeing a reduction in production and there is only one new plant scheduled to come on stream in the US in the next three years. As plants in Qatar, Algeria, and Russia become fully operational they will be expected to supply the growing demand in Asia and the Middle East allowing US exports to slow down. Depending on the pace of growth in the US helium market, the US may become an importer of helium from the new foreign sources previously mentioned.  Until that time, technological research to decrease the need for helium as an input to the production of other goods and services is underway while the science and medical industries look for ways to recapture and recycle helium.

Click Here to Learn More About Where Helium Comes From and Future Supply

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