Helium Reserves, Cutting Spending, and Prudence

The privitization of Federal helium reserves is a textbook example of the damage to the nation that can be caused by imprudent budget cutting.

In the comments of James’ excellent post on the imprudence of arbitrarily cutting Federal workers, a discussion arose about “wasteful” Federal spending. In that discussion, James said:

It never ceases to amaze me how hard it is to muster the political backbone to make obvious cuts. Aren’t we still subsiding helium for dirigibles?

This caught my attention because it’s a subject near and dear to my heart: the absolutely, positively stupid, shortsighted, and ignorant manner in which Congress decided to privatize the Federal Helium Reserves. In the name, of course, of cutting costs.

A little background is in order.

It’s true that yes, the Federal Helium Reserves were established in 1925 to preserve helium for dirigibles. But since that time, helium as become an absolutely essential component to a large number of technologies. Particularly, MRIs and superconductors. And it also plays a role in several different medical treatments.

And here’s the thing about helium. For many industrial applications, there is no substitute for helium. For MRI’s, there’s no substitute for helium. None. When supplies run low, operations have to cease. Period. End of story.

Here’s another thing about helium: what we have on Earth is all we got. Once it’s gone, it’s gone. So that helium you suck into your lungs to make your voice high pitched? Once it’s out of your mouth, it’s gone. It can’t be used again.

Here’s the third thing: there is, as of yet, no way to produce more helium. Right now in the circles studying the matter, the cheapest way to get more helium once it’s gone from Earth is to go to the Moon and mine it.

Let me repeat that: once the Earth’s helium is depleted, the cheapest way to get more helium is to get it from the Moon.

Now, let’s return to the Helium Reserves. In 1996, Congress passed the Helium Privatization Act, which directed the Secretary of the Interior to sell off the entire Helium Reserve by 2015. Of course, this was at a time when there were more uses for Helium than ever. But here’s the problem: the price that the helium is being sold at in order to deplete the reserves by 2015 is incredibly below market. It’s practically a liquidation sale. But the low prices are necessary in order to meet the Congressional directive to eliminate the helium reserve.

What’s more, not only is helium being sold below market, but getting rid of the helium reserves is creating a temporary glut in supply. As a consequence, helium is too cheap. Far, far, too cheap. So there’s no incentive to recycle it (possible in industrial applications). Right now, once it’s used, it’s gone.

As a result, it’s estimated that the world could actually run out of helium in as little as 30 years. It’s because of this that the National Research Council recommended that helium reserve prices be set to market, rather than an arbitrary price, and that some reserves are kept in place. If they’re not, the NRC estimates that the United States could become a net importer of helium, a dwindling resource, within a decade.

Let me remind everyone again: once the helium is gone, the cheapest way to get more is to get it from the Moon.

This is a textbook example of imprudent, stupid, short-sighted budget cutting. The Helium Reserves were barely a blip on the Federal budget, but because of a mania for cutting the budget, we may soon run out of a critical, non-renewable resource.

You know, you can cut costs in the short-term in your household budget by not getting oil changes anymore. But in the long-term, you’ll spend a lot more money. This is an absolutely vital concept to keep in mind over the next couple of years as Congress goes through a cost-cutting spree. It’s not enough to just look at the numbers on the accounting ledger. It’s vital that we also consider the costs of what will happen in the long-term if a particular budget item is cut.

FILED UNDER: Deficit and Debt, Economics and Business, Environment, National Security, US Politics,
Alex Knapp
About Alex Knapp
Alex Knapp is Associate Editor at Forbes for science and games. He was a longtime blogger elsewhere before joining the OTB team in June 2005 and contributed some 700 posts through January 2013. Follow him on Twitter @TheAlexKnapp.

Comments

  1. Dave Schuler says:

    Now defend the mohair subsidy. I’m not sure what the case is now but not so long ago practically all of the mohair produced in the U. S. was shipped to France where it was processed into cloth which was shipped to China and made into clothing which was shipped to the U. S. and sold.

  2. Vast Variety says:

    In my best Jackie Gleason voice, “One of these days Alice, Straight to the Moon!”

  3. Alex Knapp says:

    @Dave,

    Um, no, I totally can’t defend mohair subsidies.

  4. Jack says:

    This doesn’t even begin to discuss the importance of helium-3, which was a byproduct of our hydrogen bomb production.

    Things are complex, and unfortunately, our political system isn’t equipped to handle complex issues rationally.

  5. JD says:

    It’s [more] vital that we also consider the costs of what will happen in the long-term if [no significant] budget item is cut.

  6. James Joyner says:

    Who knew? I just thought it made your voice sound funny and airships go boom!

  7. DC Loser says:

    @Jame – The Hindenberg was a Hydrogen filled airship. Hydrogen is highly combustible. Helium isn’t. That’s why we went to helium airships.

  8. Michael says:

    Here’s another thing about helium: what we have on Earth is all we got. Once it’s gone, it’s gone.

    Not exactly true, all the helium on earth is the result of the radioactive decay of heavier elements, a process which is still on-going.

    Here’s the third thing: there is, as of yet, no way to produce more helium.

    Besides the aforementioned natural process, helium can be produced in reactors through the fusion of hydrogen.

    Right now in the circles studying the matter, the cheapest way to get more helium once it’s gone from Earth is to go to the Moon and mine it.

    Most of what we “waste” is floating around in the upper atmosphere. I’d be surprised if it was really easier to mine if from the moon than scrub it from the air.

    That said, there is certainly no viable alternative to creating or capturing the volume of helium we consume, all of the above are too expensive and too slow.

  9. Franklin says:

    Most of what we “waste” is floating around in the upper atmosphere. I’d be surprised if it was really easier to mine if from the moon than scrub it from the air.

    My understanding was that it actually boiled off into space. In either case, it would be pretty sparse up there.

  10. Alex Knapp says:

    Michael,

    Not exactly true, all the helium on earth is the result of the radioactive decay of heavier elements, a process which is still on-going.

    For practical purposes, it’s gone, because the process is geologically fast, but humanly quite slow.

    Besides the aforementioned natural process, helium can be produced in reactors through the fusion of hydrogen.

    Not without Helium-3.

    Most of what we “waste” is floating around in the upper atmosphere. I’d be surprised if it was really easier to mine if from the moon than scrub it from the air.

    There might be trace amounts in the upper atmosphere, but the bulk of it boils off.

    Overall, though, this is just nitpickery. We agree on the primary point.

  11. Alex Knapp says:

    @JD –

    The money is in controlling health care costs and pulling back defense expenses. Not eating the seed corn.

  12. James Joyner says:

    @DC Loser:

    I actually used to know that!

  13. Steven Plunk says:

    Another example of Congress being stupid but that doesn’t mean we shouldn’t be examining every possible cut.

    What would prevent Congress from now reversing itself and changing this policy? Who argues for the present policy? Why isn’t an alternative being found? Is this an example of crony capitalism? Did someone make out like a bandit?

  14. wr says:

    Oh, Plunk — You know the answer to all your questions. The reason for this policy is that some clever politician decided to score cheap shots by screaming about the evils of government waste and used this as his pet example. Just like all those “Golden Fleece” awards that are given by Republicans to vitally important scientific research that sounds funny if you describe it in the right way.

  15. rodney dill says:

    The Golden Fleece Award is presented to those public officials in the United States whom the judges feel waste public money.

    Established in 1975 by former U.S. Senator William Proxmire (D-Wisconsin), and issued until 1988, it was revived by the Advisory Board of the Taxpayers for Common Sense in 2000. Its name is a tangential reference to the Order of the Golden Fleece, and a play on the transitive verb to fleece, as in charging excessively for goods or services.

    Taxpayer for Common Sense is purportedly non-partisan..

  16. JD says:

    @Alex

    Totally agree. These tiny programs could be kept if politicians had the support of their constituents to attack health care costs, SS solvency and defense department waste. But they don’t.

  17. michael reynolds says:

    Side note on government regulation: there was a smoking room on-board the Hindenburg. A smoking room on a giant bag of hydrogen. The kind of thing a rational government regulator might have objected to.

  18. john personna says:

    I can see why German engineers would do a smoking room. A room can be made safe, and total risk is much reduced, with lower odds of a sneaky smoker.

  19. matt b says:

    @JD,

    A question that your point about support begs is whether or not anyone is coherently making the argument to their base/public that these things need to be dealt with in an ideological manner.

    Of course, taking as an example how OTB “fiscal responsibility” commenters, rather than supporting calls to move onto looking at how to sustainable address Wisconsin budget issues, are largely interested in “not letting a crisis go to waste” (yes, I get not-ironic irony) in order to break a union that’s already compromised on the economic issues — I have to wonder how serious the “engaged/educated” supporters are in really having those issues addressed.

  20. Tom D says:

    Cryogenic physicist here:

    While I agree with the spirit of this post, it’s not true that there are no substitutes for helium, which is used primarily to get things cold because it’s boiling point is 4 degrees above absolute zero and it’s relatively easy to transport.

    Of course, you don’t find it underneath Texas at 4 Kelvin, you find it at, roughly, room temperature. The substitute for using helium in industrial applications is to use the devices that make helium cold (basically extremely powerful refrigerators) in lieu of the helium itself. In the long run, it’s cheaper – initial cost high, long-term cost just electricity (which would otherwise go into making the helium cold in the first place, so it’s not an additional cost) – and that technology has improved dramatically.

    That said, countries without our He reserves typically require helium boiloff to be captured so that it can be recondensed into its liquid state.

    Neither He-4 nor He-3 are meaningfully renewable on the timescales of the human race, much less individual lives.

  21. Tom D says:

    Cryogenic physicist here:

    While I agree with the spirit of this post, it’s not true that there are no substitutes for helium, which is used primarily to get things cold because it’s boiling point is 4 degrees above absolute zero and it’s relatively easy to transport.

    Of course, you don’t find it underneath Texas at 4 Kelvin, you find it at, roughly, room temperature. The substitute for using helium in industrial applications is to use the devices that make helium cold (basically extremely powerful refrigerators) in lieu of the helium itself. In the long run, it’s cheaper – initial cost high, long-term cost just electricity (which would otherwise go into making the helium cold in the first place, so it’s not an additional cost) – and that technology has improved dramatically.

    That said, countries without our He reserves typically require helium boiloff to be captured so that it can be recondensed into its liquid state. Neither He-4 nor He-3 are meaningfully renewable on the timescales of the human race, much less individual lives.

  22. cyd says:

    Shorter version: enjoy your NMR machines while you got them; they are going away and never coming back.

  23. Yes, of course. Trillion dollar annual deficits, but reducing spending is just too hard.

  24. Alex Knapp says:

    @Charles,

    You don’t think that prudence should be exercised in cutting spending? That would shouldn’t look to long-term effects?

    Long-term effects matter. We’re going to spend over $1 trillion in Iraq replacing Hussein with another dictator in the form of al-Maliki. Was that prudent?

  25. FWIW, I’ve come to the conclusion that no attempts to restore fiscal sanity are ever going to be practically successful by trying to cut the budget. Even the rather modest attempts to reduce the deficit this year alone by 6% raise a hue and cry that make that almost impossible.

    The only practical way this is going to be doen is to start over. Reset the budget to $0 and make ever single dollar from day 1 of fiscal 2012 be justified and fully funded. Well, technically, we start a bit in the hole because of interest payments and the need for a plan to reduce the current deficit over the next, say, 30 years. All, and I really do mean all, entitlements must necessarily be reset to zero.

    You may say I’m a dreamer…

  26. I’ve reluctantly almost come to the conclusion that we have to go isolationist for a while to get our house in order. I think it’s a bad idea for the US and is going t be even worse for most of the restof theworld, but we have to deal with the situation the way we find it, not the way we want it to be.

    I think the WSJ had an editorial today that indicated the federal unfunded entitlements amount to $300,000 for every man, woman and child in the US. Pretending we can fix this be removing waste and cutting are now considered non-essential functions isn’t going to do it. There’s an od saying that luxuries becom necessities. This has never been more true than with the entitlements of the welfare state. The entitlements are going to stop. It is now just a matter of whether it is handled in an orderly manner or not.

  27. wr says:

    Charles Austin — Do you always believe billionaires who tell you that the only way to save yourself is to beggar the middle class as they lobby to have their own taxes cut?

    Never mind, I know the answer.

  28. matt b says:

    I’ve reluctantly almost come to the conclusion that we have to go isolationist for a while to get our house in order.

    Charles, just out of curiousity, what exactly does “isolationist” mean to you? Total withdrawal from current theaters of war? Closing all overseas military bases? Shuttering embassies and clandestine operations?

    What ab out the various treaty commitments we have? And that’s before we get to all the work done negotiating/representing various interests overseas.

    Like a lot of things, isolationist is a great rallying idea, but I suspect that, without really defining such an idea (in other words moving it from an ideal), I don’t see how it’s of any practical use in real policy/budget discussions.

  29. anjin-san says:

    > but reducing spending is just too hard.

    Doing it in an intelligent and effective manner is indeed hard. Alex just showed us a reason why. I realize that “cut, baby, cut” is a lot more satisfying. It feeds into a trendy political motif (though it is worth noting that most of today’s cut spending crowd were cheering Bush’s spending spree on just a short while ago). In reality though, it is just a feel good exercise, much like “drill, baby, drill”.

    In other words, a band aid on a systemic problem.

    All of the Democrats I know understand we need to do some serious cost cutting. But they are not willing to see the pain portion of the equation left to the poor and middle class while the folks who control most of the nation’s wealth continue with business as usual.

  30. anjin-san says:

    > Who knew? I just thought it made your voice sound funny and airships go boom!

    Yes well, you are a Republican…

  31. TonyM says:

    @ TomD

    The substitute for using helium in industrial applications is to use the devices that make helium cold (basically extremely powerful refrigerators) in lieu of the helium itself.

    As someone acquainted with the uses of helium for cryogenics, specifically magnets for NMR, my understanding is it’s impossible to build high field superconducting magnets using refrigerators. I believe that magnets suitable for MRI fall into the same class. Am I wrong?

  32. Tom D says:

    As someone acquainted with the uses of helium for cryogenics, specifically magnets for NMR, my understanding is it’s impossible to build high field superconducting magnets using refrigerators. I believe that magnets suitable for MRI fall into the same class. Am I wrong?

    So the point is to get high currents by getting to cold temperatures. The main advantage of liquid helium is that it is portable and does not require the end user to do anything except pour it in. A refrigerator (pulse tube cooler) is large, loud and more or less a powerful engine running in reverse. Requires maintenance, a little more know-how, etc.

    So it’s not exactly a retrofit solution, but you can use a PTC to get down to less than 4K (how you liquefy helium in the first place). If you need He-3 temperatures (0.25 Kelvin) – which I strongly doubt – you can still use closed-cycle He-3 fridges attached to the ~3K end of a PTC. Closed cycle meaning “not boiled off in to the atmosphere.” No one in their right mind boils off He-3 as it costs many thousands of dollars for an amount that one needs. He-3 temperatures can also be achieved using different technologies (ADR fridges for example); He-3, as stated above, is only produced in meaningful quantities via the production of nuclear arms.

    The main engineering issue is cooling down a big thing is hard so you might have to use several copies of these technologies in parallel. The advantage of helium(-4) is that all you do is keep on pouring in the liquid helium and it works in “parallel” by surrounding the object you want to get cold.

    Also, one could avoid the need to get cold entirely by pouring money into improving high-temperature superconductors. “High” can mean something still very cold, like 100K (-300F), but where you could use liquefied nitrogen, which is found in abundance in the atmosphere. If we run out of that, we have no need for MRIs.

    Again, not saying this happens overnight – you’d really want these PTCs to be in a nearby sound-proofed room – and the magnets are big enough you might need several of them. THat said, the cost of even a few PTCs is probably small compared to the MRI machine, itself.

  33. TonyM says:

    @TomD

    I believe the current state of the art for actively cooled superconducting magnets for NMR is 4.7T, the state of the art for NMR magnets is 21T (MRI’s suitable for human bodies are lower field but much larger). The problem as I understand it is cooling a magnet powerful enough to generate 21T and keeping mechanical vibration and other noise sources due to active cooling low enough to collect useful spectra is not possible with current technology. What I don’t know is whether scaling from 4.7T to 21T is just a matter of scaling current technology, or whether it requires a change similar to the development of gas turbines instead of propellers for supersonic flight.

    Then again high field NMR, and even MRI, aren’t strictly necessary for civilization, we may be able to survive without them altogether.

    As for your other questions, He-3 is unnecessary for NMR, I believe the magnets are some sort of niobium/tin compound (Tc=18K), and research is being done on using only high temperature ceramic superconductors which could eliminate the need for He at all, but that is still in its infancy. High field magnets that recycle their He are being developed and should be the norm on the market within 5-10 years.

  34. Tom D says:

    @TonyM

    As I think you agree, the problem is not fundamental. There is no specific “NMR = I need helium” logic that supports the end days conclusions of the post. The economics seem right to me, the physics and engineering are not.

    As always, solutions are borne of necessity and a helium shortage would just cause more research to go into cryoengineering and high-Tc superconductors. If it means less MRIs in the meantime, that’s probably not a bad thing. I was given an MRI when I had my appendix out – I displayed all the symptoms, but the pain level subsided somewhat so they wanted to make sure it was appendicitis. Anecdote is not the same as data, but it seemed to me that the MRI was poorly justified as they had been previously ready to go.

  35. Tom D says:

    PS. Go to just about any lab in Europe and they have had He recycling for years. Special pipes throughout the building that you hook your boil-off to. A commercial solutions is obviously a bit different, of course, but point remains that we are very unnecessarily wasteful, in large part due to low sticker prices.

  36. wr, bite me.

    matt b, I said there was a downside.

    anjin-san, BS. When you find some Deocrts, oeven Republicas who are talking $1.5T in cuts THIS YEAR ALONE, let me know.

  37. Sorry, that’s Democrats and Republicans. Weird keyboard…

  38. An Interested Party says:

    Trillion dollar annual deficits, but reducing spending is just too hard.

    About as hard as raising taxes…so the trillion dollar deficits will continue…unless we get something like the 90s Internet bubble…

  39. anjin-san says:

    Charles you are starting to sound irrational. I am not saying this because we often (well always) disagree. You may well be a fine fellow. I can’t really say, I don’t know you.

    But you sound like my mother after she has done a three day cable news marathon and is halfway to a panic attack. Go for a walk and get some fresh air. This may piss you off, but I do not intend it in a nasty way.

  40. matt b says:

    Perhaps putting what Anjin said in a nicer way. Charles I take back the suggestion I made that you were a troll. And I really appreciate that you’re willing to engage and productive push back.

    Which gets me to this response to my question of what did you mean by isolationism as a serious possibility in our current globally interconnected state:

    matt b, I said there was a downside [to isolationism].

    Do you seriously mean that you are advocating for all but completely severing ties with the rest of the world? That you think that type of turning back the clock to an imagined fully independent state of being (that never existed in our nation’s history) is an actual viable option?!

    Dude if you are being remotely serious about that above idea… Yeah, I do think you need to take a break or something. Because even believing such a thing is *possible* let alone a reasonable/rational policy suggestion is (I’m really sorry about this) unrealistic to the point of being crazy.

    I realize that you’re concerned we’re moving in a post-national direction. We’re not. Trust me. The modern nation state is evolving but it ain’t going anywhere.

    But the way you seem to be defining isolationism, I don’t have any idea about how to engage with that.