This is a strange story.
First, the Congress apparently decided to privatize helium producing "mines" in 1996. I hadn't realized that the helium industry was a state-owned enterprise in the first place. Was it really necessary to nationalize the inert gas industry, when we already have an inert Senate?
But, okay, fair enough, we privatized the industry. But the federal government still sets the price? According to this article, that's the case.
The problem is that very few new producers have entered the "industry." That may be because there are not many underground stocks of pressurized pure helium. But it also may be because THE FREAKIN' FEDERAL GOVERNMENT IS STILL SETTING THE PRICE.
Economics is hard, but it's not THAT hard.
First, the Congress apparently decided to privatize helium producing "mines" in 1996. I hadn't realized that the helium industry was a state-owned enterprise in the first place. Was it really necessary to nationalize the inert gas industry, when we already have an inert Senate?
But, okay, fair enough, we privatized the industry. But the federal government still sets the price? According to this article, that's the case.
The problem is that very few new producers have entered the "industry." That may be because there are not many underground stocks of pressurized pure helium. But it also may be because THE FREAKIN' FEDERAL GOVERNMENT IS STILL SETTING THE PRICE.
Economics is hard, but it's not THAT hard.
5 comments:
I don't understand... are you saying the price would be higher on the free market, or lower?
Mining is a capital intensive industry. Would you enter the helium mining sector knowing prices are fixed and turning a profit may be illegal?
Err, you don't go helium mining.
Certain natural gasses (umm, all gas, but only certain have enough to make capture worthwhile) have enough helium in them that condensing it out is worthwhile.
But you would never drill for the helium: it's a nice by-product, possibly, but no more than that.
Looking at the USGS numbers (which should be your first stop for any mineral resource availability) known reserves are a 300 year supply.
This is what is known in hte minerals world as "not a friggin' problem".
As I understand it, Govco is only setting the price of its own helium -- while it draws down its reserve.
"There's a helium reserve?!!" you ask. Yup, since 1925, the US maintained a helium reserve in case of war, so the they'd have it to fill all the Army & Navy blimps.
By 1996, Congress finally realized that they didn't have any blimps and the armed forces had no use for helium. But they feared that dumping the reserve would depress the price, hence the price schedule. The privatization is an ongoing process.
Well, the US Army and Air Force are actually testing a new generation of blimps.
The Long Endurance Multi-Intelligence Vehicle (LEMV) developed for the Army by Northrop Grumman took off this month.
http://www.youtube.com/watch?v=z72GPZ3MI2M
Meanwhile the Air Force blimp project, which was based in NC and fittingly called Blue Devil, was canceled just last month.
Herr Fuchs
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