To most people helium is the gas that makes children’s balloons float and voices sound like Donald Duck. In the last two years, however, helium became a focal point in the messy political struggle to downsize the federal budget. Last year, Congress and President Clinton acted to sell off the federally maintained helium reserve.
Critics have ridiculed the helium reserve as a white elephant left over from the days of World War I dirigibles. Representative Christopher Cox (R-Calif.) labeled the reserve a “poster child of government waste.” President Clinton originally called for the helium reserve program’s improvement as part of his “reinventing government” proposals. Ultimately, however, Clinton sided with congressional Republicans, labeling the reserve “an anachronism” and calling for its elimination.
In the swirling winds of political rhetoric, however, the government may have acted precipitously. Helium has unique properties that make it irreplaceable for science and industry. As the only element that does not freeze solid-remaining liquid even at just a fraction of a degree above absolute zero (-460 degrees Fahrenheit)-helium is essential for a variety of uses that require extreme cold. According to the American Physical Society, the reserve’s elimination will lead inevitably to U.S. shortages of helium and disrupt scientific and industrial research.
The United States is home to rich natural reserves of helium, mixed with methane in the gas fields of Texas and Wyoming. U.S. companies recover more than 3.3 billion cubic feet of helium every year. In 1996, the U.S. consumed 2.4 billion cubic feet of helium and exported another 970 million cubic feet of the gas. Because of the slim margin between production and consumption, a reserve is crucial to provide consistent supplies.
According to the American Geological Institute, the federal government uses approximately 300 million cubic feet (MCF) of helium a year on space, military, and civilian research. NASA, for example, has found helium essential for purging and pressurizing the fuel tanks of spacecraft because it is the only elemment that remains a gas at the extreme cold necessary to maintain the liquid hydrogen fuel used in many rockets and the space shuttle.
A host of industries have become similarly dependent on a consistent, expanding, supply of low-priced helium. Heavy users include superconductivity researchers, who use 172 MCF of helium a year. One of the major applications of superconductors-magnetic resonance imaging for medical diagnostics-consumes another 440 MCF. Gas-tungsten arc welding, taking advantage of helium’s inert nature, employs the gas to protect metal from oxidation, creating demand for about another 460 MCF. Helium is also valuable for detecting leaks from even the most microscopic cracks and pores in sealed containers such as fuel tanks and the “clean environments” of electronics fabrication facilities. Other emerging technologies that depend on helium include fiber-optic production, which demands an ultra-pure inert atmosphere, and Josephson junctions-liquid helium-cooled superconducting microswitches that are faster and more energy efficient than today’s semiconductors.
Congress created the strategic helium reserve in 1925 mainly to ensure a steady supply of helium for military applications such as dirigibles. In 1960 the program was expanded to include refining and storage facilities and a permanent stockpile. The reserve now holds 32 billion cubic feet of the gas in an abandoned natural gas cavern called the Cliffside Dome near Amarillo, Tex. To create the reserve, the Department of the Interior and the Treasury offered the reserve a $252 million loan to purchase the needed helium supplies, mostly from private natural gas refineries, to be repaid in 25 years. But sales of helium to private industry have not generated enough revenue to repay the loan and accumulated interest. The result is a $1.4 billion “debt” owed by the reserve to the U.S. Treasury.
Critics of the helium reserve have cited this debt as a measure of the reserve’s inefficiency. But this is misleading. The so-called debt is an accounting formality, owed by one agency of the federal government to another; it could be written off without significant consequence to the federal budget, according to the General Accounting Office and the Department of the Interior’s inspector general.
Nevertheless, the Helium Privatization Act of 1996, introduced by Rep. Cox last September, moved through Congress with speed rare for a measure killing a federal program, and President Clinton promptly signed it into law. The bill instructs the secretary of the interior to eliminate all federally operated helium refining activities and to dispose of all equipment and facilities. By January 1, 2005, the Department of the Interior is to begin selling all remaining helium reserves.
In a concession to scientists and advocates of the helium industry, the bill also requires the National Academy of Sciences to study the sales of the helium reserve to determine if the reserve’s elimination will hurt U.S. industry. The Secretary of the Interior is also directed to monitor the sale of helium from the reserve to ensure that the sale of so much of the gas does not disrupt the commercial helium industry.
By eliminating the reserve, the federal government, which consumes nearly 75 percent of the gaseous helium market, has placed itself at the mercies of the market. Private markets often see periodic shortages and supply swings; without a guaranteed supply, NASA and other government agencies might find themselves forced to bid against private concerns for limited supplies, whose prices would be driven considerably higher in times of shortage. This rise in helium prices may wind up costing the government more in the long term than it would have to maintain the helium reserve.
It may be possible to reach a compromise position between those who favor abolishing the reserve and those who seek to protect it. Organizations such as the American Physical Society do not oppose privatizing the reserve per se, so long as it is not destroyed. If the federal government, burdened by budgetary problems and bureaucratic sprawl, is no longer willing to manage the reserve, it could be turned over to some form of private partnership involving helium suppliers organized to preserve and administer the stockpile.
The federal government could implement such a partnership easily enough by forgiving the helium reserve’s artificial $1.4 billion debt and seeking the participation of private suppliers. Those suppliers have an interest in keeping the reserve-if only to prevent the market price of helium from plunging in the wake of a wholesale sell-off of the stockpile. Such a partnership would ensure the nation a steady supply of helium while still satisfying the desire of congressional budget hawks to shrink the federal government.
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