Explaining the Helium Shortage and Why It Matters

The economic impact of helium isn’t often talked about, but that doesn’t mean it’s just hot air. This colorless, odorless gas powers more than just the birthday balloon industry. Helium plays a critical role in several sectors, including semiconductor manufacturing, medical technology, and space travel. Notably, MRI machines require helium, and about a third of the world’s supply is just destined for this use in medical equipment. But over the past decade, a growing shortage made investors take note.

What’s Causing the Shortage?

Traditionally, helium has been captured as a byproduct of during the extraction of fossil fuels, such as natural gas. But fracking, a key way to extract gas, doesn’t produce as much helium as a byproduct, exacerbating the shortage.

This has led to a declining supply of helium. Several research projects are underway to discover new helium deposits, and a handful have already been discovered in Minnesota, Canada, South Africa, and Tanzania. But given the difficulty of extracting the element, it’s unclear when or if these discoveries will have a tangible impact on the market.

Additionally, the U.S. government accepted an offer to buy the Federal Helium Reserve, which supplies 30% of the country’s helium, from industrial gas giant Messer LLC. This transition from public to private ownership could lead to additional hiccups that could weigh on the helium supply.

Inflating Prices

Unlike other commodities, like oil or gold, helium isn’t traded on a global futures market, which makes it harder to track prices precisely. That said, the shortage of helium has driven prices up by as much as 800% since 2018.

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