There I was, sitting in a convention hall in Las Vegas at the International Balloon Association (IBA) meetings this year. As a former Vice-President and International Convention Director of the association, I feel I have a vested interest in this group as well as everything it stands for. I was pleasantly surprised the room was pretty full. Well over 150 people were there at the beginning of the meeting to hear an important discussion about the helium problem in our world today.

Most unfortunately, by the end of this session, what was discussed and disseminated to us were not the only issues making me very uncomfortable. Just as serious as the facts given and issues debated was another fact – there were less than ten people left at the end of the meeting! To be sure, this was a very long discussion. A number of people took the podium to speak. Many questions were asked, debated and answered.

This meeting was linked to the International Halloween, Costume and Party Show. Many in attendance had booths to man and because of the length of discussions the time began to creep into show floor time. So a number of audience members had to leave to be in their booths. However, the seriousness of the issues being discussed should really have trumped ANYBODY running off to their booth or to walk the aisles of a trade show. If the helium problems of supply and demand do not correct themselves, or if we do not work with the gas in a more careful way, there won’t be much of a balloon industry left to tend to.

All of these distributors and manufacturers running to their booths to sell balloons and related materials and equipment missed the forest for the trees. The same can be said for anyone else who took off to walk the show.

IF HELIUM SUPPLIES DWINDLE WE WON’T BE ABLE TO SELL MANY BALLOONS (OR RELATED SUPPLIES AND EQUIPMENT) BECAUSE WE EITHER WON’T BE ABLE TO ACQUIRE OR WON’T BE ABLE TO AFFORD THE GAS TO FILL BALLOONS!!

If there is no helium to use there will be no need to buy or sell balloons!
If there is no helium to use there will be no equipment needed to purchase!
If there is no helium to use there will be no need for ribbon or tulle and hundreds of other items we need and use every day!

Helium is the “horse before the cart” of this industry. Without the gas, we’ll be selling lots of lovely air-filled creations to be sure. But, what gives this industry a real “lift” (and no need to pardon my pun) is the fact that the gas gives our product an other-worldly quality. Balloons floating skyward, going against what our eyes and minds say should be happening is what makes them so uniquely different than anything down here on Earth. Balloons floating high above our heads as single items purchased, as arrangements, in arches or columns, or used to lift other items are what gives magic and wonder to our business. This business of balloons would not be an industry without helium.

At this meeting, we received (and what too many people missed) a whole lot of information. Some of it surprising, much of it made perfect sense and some of it was downright upsetting.

If you need it in a nutshell, here it is:

1. The shortage has not been contrived.
2. Expect more price increase; as many as two or three a year until perhaps 2012.
3. There is almost NOTHING we can do about this problem but hang on for the ride.

The meeting hosted by The International Balloon Association (IBA) brought together a number of manufacturers, distributors, decorators, party store owners and others. The keynote speaker of this meeting was Phil Kornbluth. Mr. Kornbluth is the Executive Vice-President of Global Helium, Matheson Tri-Gas. His company supplies bulk and specialty gases and gas handling equipment. His company is one of only six companies in the world today that refines and supplies helium.

Let me repeat that:
His company is one of only six companies in the whole world today that refines and supplies helium!

And here is something else startling – there are only 15 sources of helium in the entire world! Ten of those 15 are in the United States.

So, there are very few sources for helium and even less refiner/suppliers of the gas. One little hiccup in the supply of helium at the source, in refinement or in distribution and everything goes haywire. In 2006, the United States Bureau of Land Management started hiccupping and the whole world got indigestion. Mr. Kornbluth called this the beginning of the “perfect storm” not only for us, but for everyone on our planet that needs and uses helium today.

The Bureau of Land Management (BLM) is THE major supplier of crude helium to refiners in the United States, who market and sell pure helium throughout the world. Managing the nation’s “federal helium reserve” was a quiet federal program until 2006 when temporary shortages made news around the world.

Mr. Kornbluth said the #1 cause of our shortage problem was the BLM losing pressure in two of its three compressors in 2006. This caused outages to supply the helium and the shortages began. And because America supplies 75% of all the helium in the world and the BLM holds most of the helium, pretty much every helium supplier experienced tight supply,

2006 was just a real bad year for helium. Beside the BLM issues, there were capacity utilization problems in both Algeria and Qatar. This impacted 8% of the worldwide supply. Planned shutdowns and unplanned outages occurred in four other plants as well.

2007 really wasn’t much better as price increases continued, surcharges were employed by suppliers and almost every supplier of the gas was put on “allocation” (i.e. they were being rationed). Added to these issues was trouble at the huge ExxonMobil plant throughout much of the year. First, production was off 15% from April-September because of a CO2 removal problem. Then in October their output was reduced by 50% while repairs were being made to fix the initial problem.

This brings us to 2008. While supply shortages have eased somewhat, there is still so much that could go wrong to create more troubles for not only price increases but supply shortages as well.

TRUE or FALSE??

When a crisis of any kind occurs in our world today, there seems to be a propensity to want to twist the facts to either make a better story (in the media) or cause more of a stir. The very same holds true when talking about helium and the predicament we are in because of the short supply of this most necessary gas for our industry. Here is a little quiz you can take to see just how much you think you really know about helium in the world today:

The world is going to run out of helium by 2015.
FALSE

The U.S. government’s strategic stockpile will be largely sold off by 2015. The world still has tremendous unexploited helium reserves.

Helium price increases are the result of price gouging by suppliers who are making excessive profits.
FALSE

Despite the price increases, helium profitability is not much different from other gases. Helium profitability has recovered after a series of cost shocks and reduced margins earlier in the decade.

Helium is the only gas on earth that is lighter than air.
FALSE

Helium is the second lightest element and second smallest molecule behind only Hydrogen. This acronym 4H MEDIC ANNA will help you remember all the lighter than air gases:

H – Hydrogen
H – Helium
H – Hydrogen Cyanide
H – Hydrogen Fluoride
M – Methane
E – Ethylene
D – Diborane
I – Illuminating Gases
C – Carbon Monoxide
A – Acetylene
N – Neon
N – Nitrogen
A – Ammonia

Helium is the only gas used to lift balloons.
FALSE

Many of the gases listed above are not practical for use in balloons, but they have been used. The following combine poor lift with objectionable properties: carbon monoxide, hydrogen cyanide, hydrogen fluoride, diborane, ethylene and acetylene. Nitrogen has negligible lift. Neon is harmless and offers a modest degree of lift; however it costs roughly the same as helium, another noble gas with far superior lift. The four remaining gases (ammonia, methane, helium, and hydrogen) have been used as balloon gases.

Ammonia has sometimes been used to fill weather balloons. Due to its relatively high boiling point (compared to helium and hydrogen), ammonia could potentially be refrigerated and liquefied aboard an airship to reduce lift and add ballast (and returned to a gas to add lift and reduce ballast).

Methane (the chief component of natural gas) is sometimes used as a lift gas when hydrogen and helium are not available. It has the advantage of not leaking through balloon walls as rapidly as the small-moleculed hydrogen and helium. (Most lighter-than-air balloons are made of aluminized plastic that limits such leakage; hydrogen and helium leak rapidly through latex balloons.).

Helium is used primarily for balloon sales.
FALSE

Helium is a very, very strategic element and has many different uses other than for balloons. 20% of the entire world’s output of helium is used for MRI machines. These medical machines you find in nearly every hospital in our world, and in special MRI centers and doctors offices, use more helium than any other single category of helium user on Earth today. And therein lays a huge problem for the balloon industry. When the going gets tough for helium distribution, the medical, military and high tech fields will get first crack at the gas long before it is distributed for party balloons or parades.

Balloons fall in the helium usage category of “Lifting,” along with parade balloons, scientific and weather observation, the military, DEA and border surveillance craft (e.g. Unmanned Aerial Vehicles – UAV’s), blimps for advertising and TV broadcasting, heavy lifting and automotive air bags. All of these items together form the “Balloon/Lifting/Inflation category for helium usage.

Surely all of these lifting items together use a huge amount of the worldwide supply of helium?
FALSE

The entire category of “Lifting” usage for helium only uses 8% of the world’s supply of the gas. We are mightily beaten by the previously mentioned MRI (20%); welding (17%) and lab work (10%) categories.

Chemically speaking, helium’s most valuable property is that it is a lighter than air gas.
FALSE

Though it’s lighter than air quality is fairly unique and very useful, today helium is used in many different applications because of its other special qualities. These days, it is most sought after because it can get so incredibly cold and not freeze.

Helium is:

Colorless, odorless, tasteless gas
Chemically and radiologically inert – helium is non-reactive and does not become radioactive
Second lightest element and second smallest molecule
Helium has the lowest condensation point of any substance (–452°F)
Helium remains liquid even at absolute zero (-459F/-273C)
Helium gas has very high specific heat and thermal conductivity

So what’s the up and coming product for helium usage and who is using it? There is actually a clue in this story. Find it if you can!

You won’t believe it when I tell you…it is flat screen monitors, TV’s and LCD’s!!

Asian countries producing LCD panels of any kind use helium in every single screen. Asia now accounts for 25% of all helium usage in the world today primarily because of LCD technology.

So, the business of balloons commands only a very, very small portion of the helium pie. Prices will unfortunately continue to rise until probably 2012. True to what we were told, Life O’ The Party has experienced two price increases so far this year. The hope is there will be a leveling off of supply and demand issues and the costs will stabilize by then.

Can we be sure? No, not any more sure than we can be of oil and farming and insurance and housing prices and the mortgage crisis and, and, and – it goes on and on for all of us.

However, we at Life O’ the Party are doing everything we can to minimize your cost to bring you beautiful balloons for décor and gift giving seven days a week.

Thank you very much for your patience, understanding and hopefully appreciation for the global problem we face when providing balloons for you, your family and friends.

If you have any further questions please do not hesitate to contact me personally.

Sincerely,

Mark Zettler, President