On Thursday, Party City announced financial results for the first quarter ended March 31, 2019. James M. Harrison, Chief Executive Officer, stated, “Overall, our first quarter results were largely in line with our expectations on the top and bottom lines, inclusive of the helium shortage, which negatively impacted our latex and metallic balloon categories.
Although Party City usually closes 10 to 15 stores a year, according to Harrison, for a company that depends on balloons, being unable to provide ones that can float presents a serious problem, reports Gizmodo.
In a statement from Party City CEO, Jim Harrison, he makes it very clear the store closures are completely unrelated to the global helium issue. “It’s important to note that Party City’s decision to close an increased number of stores in 2019 is completely unrelated to the global helium issue. These are two separate topics, the latter of which we’ve made significant in-roads in addressing. The decision to close 45 stores in 2019, is part of our network optimization process focusing on maximizing store performance on a market basis. We believe that the opportunity to recapture much of the business conducted in the closed stores in other Party City locations within the market, will provide for overall improved profitability for our Company. It is also important to note that most of the stores being closed were themselves profitable on a stand-alone basis.”
East Hanover, New Jersey-based Party City even posted a notice on its website under the heading “Global Helium Shortage,” it cautioned that “helium supply has always been a little up in the air (pun intended).” The company did propose alternatives, like taping air-filled balloons to a wall to create an arch.
The company also pledged to help its customers who can’t get helium balloons still “throw an unforgettable party.” The Detroit Free Press writes about one mom was very unhappy after failing to find helium balloons on Facebook. She just had to vent, ending with a curse and a question: “WTF. Now where do I go for fun balloons?”
The problem over the shortage of helium for party balloons that end up gathering dust in the corner of a room is actually small potatoes in comparison to the bigger problems that the shortage of the gas is causing worldwide.
Helium and where it comes from
The helium shortage being experienced today has been years in the making. First – a few facts about the gas are needed. Helium is the second lightest element in the universe and besides being extremely light, it can get extremely cold without freezing. These unique properties make its use essential in industrial, medical and scientific fields.
Because helium is formed as a by-product of radioactive decay processes, it is being made all the time. The inert gas is also very adept at escaping into the atmosphere. However, most of it is trapped in underground reservoirs, usually in the same places where natural gas is found. A few gas drillers go to the extra effort of separating out the gas and either sell it or store it.
But even going to the trouble of extracting helium from methane gasses is based on cost because if there is a low ratio of the gas to methane, it just isn’t cost-effective to mess with it.
About 75 percent of all the helium comes from just three places: Ras Laffan Industrial City in Qatar, ExxonMobil in Wyoming and the National Helium Reserve in Texas, according to gas-trade publication Gasworld.com. Reserves in Texas are being depleted, while at the same time overall demand for the gas has been growing.
The U.S. passed an absurd law in 1996 that mandated that all helium in a disused natural gas field in Amarillo, Texas was to be sold by 2015 in order to recoup the initial investment that went into building up the reserve. That field was estimated to hold about half of the world’s reserves.
The law also said that the same amount of helium was to be sold off every year, in other words, the amount sold was to follow a straight line, irrespective of the global supply or demand. This mandate caused the market to swell and drove down the price of helium on the global market.
But now, reserves have been depleted, not just in the United States, but worldwide. Now, scientists are now saying the Earth’s supply of helium could be depleted within the next 30 years.
Helium’s uses in a variety of industries
Helium is an essential chemical element used in magnetic resonance imaging and nuclear magnetic resonance imaging as a coolant. Helium also is used in space flight to pressurize the fuel tanks of liquid-fueled rockets, in satellite instruments, in aerospace for supersonic wind tunnels and is even combined with oxygen to create nitrogen-free atmospheres for deep-sea divers.
Researchers wouldn’t be able to use the NMR spectroscope. “It is a serious problem,” said Roman Dembinski, an organic chemistry professor at Oakland University in southeast Michigan. “A shortage and disruption would quench our magnets, so we would be without instruments.”
“If the superconductive magnets warm up because of a shortage of helium, they will quench — the process that the magnets are no longer superconducting,” Dembinski said. “To keep the instruments running, there must be a continuous supply of helium.”
The sad fact is that the price of helium has risen so high that it will have an economic effect on not just helium balloons, but on the space industry, medical care, and research. Just a few years ago, a cylinder of helium cost $200. Today, that same cylinder can run up to $20,000. I guess the big question is this – Is a helium balloon really needed?
