Currently, helium cannot be produced efficiently and economically. The few ways it can be harvested includes extraction from natural underground deposits, or from the production of natural gas in which helium is a byproduct.
As helium is a very light gas, it has to be captured quickly, or it will float up into space.
Three main sources produce some 75 percent of the world’s helium — sites in Qatar, Wyoming and Texas — according to gas industry publication Gasworld. In fact the U.S. has for decades provided much of the world’s supply.
However, the U.S. government will be exiting the helium business, according to a 2013 law. The helium the government owns is in Texas, which is being depleted.
There is no helium futures market, but a U.S. government auction carried out by the Bureau of Land Management last September saw crude helium prices jump a whopping 135 percent on-year for its 2019 delivery, according to Gasworld.
It was the last auction of U.S. reserves to be sold to a private industry.
Meanwhile, overall U.S. production has also fallen as the bureau has been rationing supply since February 2018 after a group of countries lead by Saudi Arabia announced an economic embargo of Qatar. That created chaos in the helium supply chain for weeks as roughly 30 percent of the global supply was taken off the market.
While that has been resolved, new supplies that are supposed to come online have been delayed and unplanned plant outages have further impacted the market, wrote Phil Kornbluth, a veteran helium industry consultant.
But demand from high-tech manufacturing, including demand from China, is also rising.
In a market dominated by just a few sources, any disruption in the supply chain will have a magnified impact.
“The problem is, helium is being used up faster than it can be produced these days,” wrote Anders Bylund, an analyst at Motley Fool in a recent note.