Party-balloon enthusiasts would suffer, sure. But more importantly, a shortage would cause chaos in large swaths of the economy dependent on helium, from medical scanners to welders to manufacturers of optical fibers and LCD screens.
But here's good news: The helium cliff is no longer nigh! On Thursday, the House and Senate both approved a bill that would keep the Federal Helium Reserve open for years to come. (President Obama has indicated he will sign the bill.) Lawmakers have essentially averted a fiasco of their own making.
On top of that, the bill would also end, slowly, the Helium Reserve's practice of giving away the gas for below-market rates, a practice that has led to excessive waste and has prevented the private sector from developing its own sources of the scarce resource.
The helium crisis
The U.S. government first set up a national helium program in the 1920s, when blimps and other airships seemed like a useful military technology. That included a sprawling underground Federal Helium Reserve stretching from Kansas to Texas.
But by the 1990s, the program looked frivolous. So, Congress passed a bill requiring the Helium Reserve to sell off its helium in relatively short order and then shutter its doors once it recouped its costs (a milestone that will come in October).
Fixing the market for helium
The House and Senate-passed bill will try to correct these errors. For starters, the reserve will no longer close on Oct. 7. Instead, for the next year, the Helium Reserve will continue giving away its helium for cheap. After that, the reserve will slowly begin auctioning off a portion of its helium each year to the highest bidder. (After 6 years, the reserve will auction off all the helium.)
The hope is that those auctions will ultimately end the distortions in the helium market. Countries like Qatar and Russia will be able to ramp up their production of helium from natural-gas fields. Medical companies will have incentives to do things like install gas-capture technology in MRIs to limit waste and promote recycling. We'll have a normal market for helium.
The House and Senate bills also try to ensure that scientists will continue to have access to helium for research purposes. Once the Helium Reserve dwindles down to about 3 billion cubic feet of gas (in about six or seven years), the remaining amount will be set aside for federal users, especially those receiving research grants.
Not all scientists are happy with this new arrangement. Supplies of liquid helium can often constitute 30 percent of the budget for certain low-temperature physics projects. And helium prices are inevitably set to rise in the years ahead, as the market takes over. That could make some research projects more difficult to do.
Yet it's not clear there would ever be a completely painless way to fix a helium market that has been distorted by years of price controls. The bill in Congress, at least, will stave off an immediate shortage come Oct. 7. And it should slowly bring the market back to balance over time.
Now back to fretting about the debt ceiling...