UFOs and Hot Air Hinder Helium Reforms

Americans have been blown away by reports that the Pentagon has been shooting UFOs out of the sky. The Biden administration has tried to deflate the hype surrounding this extraterrestrial extravaganza, but the American people deserve answers that they are simply not getting. The most likely explanation floated so far is that most, if not all, of the objects are balloons, whether commercial, homemade, or scientific. But, the Chinese-made balloon that kickstarted this chaos had suspiciously broad capabilities, leading to legitimate fears that our adversaries are spying on the United States.

While American and Chinese balloons may look different and serve different purposes, they share the common ingredient of helium. The supply of this non-renewable gas is in jeopardy because of government control of reserves, healthcare demand, and yes…a surge in balloon making. Unless the private sector takes the lead, foreign foes can use this disruption to their advantage and get an upper hand on spying capabilities. Federal officials need to blow away the hot air permeating the policy sphere and let market forces take the lead on helium.

For an inert, colorless, tasteless, and odorless gas, helium certainly pulls its weight in applications. In addition to lifting balloons and vocal pitches, helium plays a key role in semiconductor chip production and even supports magnetic resonance imaging (MRI) machines. But, helium supply is being squeezed on all fronts. The federal government controls the flow of the gas through the Federal Helium Reserve operated by the Bureau of Land Management. For decades, the BLM sold the gas at below-market rates, resulting in artificially low prices, wasteful consumption, and burgeoning demand.

This situation improved when the government shifted to an auction-based system following enactment of the Helium Stewardship Act of 2013. For the first time, the market demands of helium refiners – not the whims of bureaucrats – were determining the price and allocation of the critical gas. Despite progress, problems soon emerged. Non-refiners claimed that the government stopped selling to them and refiners weren’t willing to work with them, resulting in supply shut-outs and wide price spreads. Then, in early 2022, a leak at the government-operated Cliffside crude helium enrichment plant caused a shutdown in operations, spurring a major supply shortage. Now, the Federal Helium Reserve is 90 percent depleted, and plans to privatize federal helium resources are up in the air.

This uncertainty and volatility threaten to undermine innovation and national security. Surveillance and weather balloons require a gas less dense than air to get off the ground, and only helium and hydrogen feasibly fit the bill. The U.S. lags far behind China on hydrogen production, mainly because China can produce hydrogen cheaply and at large scale from coal. Demand and regulatory constraints have decimated the coal industry in the U.S., and it is unlikely America will reverse course anytime soon. While it is possible to produce “green hydrogen,” this would entail significant expenseand may not in fact be environmentally sustainable.

Barring significant technological breakthroughs, the U.S. is pretty much stuck with helium for a wide array of applications. Fortunately, long-awaited privatization of helium reserves may provide some much-needed stability to markets. Less concentrated supplies would make it harder to shut out non-refiners and mitigate the supply impacts of leaks. And, ending uncertainty about future ownership would likely lead to an increase in investment and resulting supplies. Underinvestment is inevitable when the government (not private players) holds the keys to future rewards.

Reversing this status-quo can send America soaring to new heights, bolstering national security and lowering healthcare prices. It’s time for policymakers to get their heads out of the clouds and focus on real reforms sub-stratosphere.

David Williams is the president of the Taxpayers Protection Alliance.