When you hear of economic deflation, you probably wouldn’t think about the balloon industry. How-ever, with the Federal Helium Reserve expected to close as soon as October 2013, the U.S. Senate hangs in the balance, wagering options for the world’s helium supply.
For Gretchen Howe, owner of Richie’s Florist in Colusa, just may have enough helium supply to last to the end of the year, but worried balloons may disappear altogether.
“When I first heard of the shortage, I thought ‘Uh-oh’,” said Howe who has owned the Colusa based Floral and Gift Shop for the last 30-years.
From birthdays, to anniversaries, celebrations and special holidays – it’s hard to imagine our society without balloons.
“What are people going to do?,” said Howe, “Balloons play a large part in celebrations it has become a tradition.”
Latex balloons, as we know them today were first manufactured by J.G. Ingram of London in 1847 where hydrogen was originally used to inflate balloons. Hydrogen brought play and joy to the balloon world, but it also brought an equal or greater amount of danger; easily exploding and were highly combustible. Hydrogen was eventually replaced by helium making it much safer, and possible for balloons to have a variety of uses.
“I remember my mother reading an article in a Floral Industry magazine in the 1970’s,” said Howe, “She was excited about a new product called ‘Mylar’ balloons that we could add to our line of gifts.”
Under current law, the Federal Helium Reserve will close its doors the first week of October, leaving businesses that sell helium-filled balloons realizing that what’s left in their helium tanks might be their last – for a while.
“I am quite concerned about the helium supply,” said Howe, “I sell quite a few balloons, and have a large inventory. Not only will I lose sales, I will lose money on product I cannot sell.”
Although 4% of Howe’s business relies on balloons, they play a large role in many special occasions and holidays such as Valentine’s Day and Graduations.
“People in general like balloons,” said Howe, “It is very popular with children and the elderly.”
As supply diminishes, less crucial services such as the party-balloon industry, will find it increasingly difficult to supply the demand, and cause prices to be unstable; many balloon retailers around the country have been experiencing price increases on their helium supply, up to 50% higher.
“I have not seen price increases yet,” said Howe, “But I have been warned by my supplier that my next order may cost substantially more.”
With the rise in costs, some balloon retailers are closing their doors.
“My son recently spoke with a balloon vendor on the streets of Sacramento,” said Howe, “and the vendor commented that once his tank was empty he was forced to close his business. His customers were not willing to pay the higher prices.”
Although helium is the second most abundant element in the universe, it is rarer on earth. Crude heli-um is a byproduct of processing natural gas liquids in the United States and liquefied Natural Gas Off-shore. From processing, crude helium is purified and liquefied for sale and delivery.
The Federal Helium Reserve supplies about 40 percent of domestic and 30 percent of world helium demand. The alternatives for helium are limited and often nonexistent. The abrupt closure of the re-serve to commercial and federal customers would disrupt major parts of the U.S. economy.
Beyond colorful balloons, helium is important to a wide range of critical sectors of the U.S. economy, including semiconductor and fiber optics-manufacturing, medical diagnostics, welding, aerospace and federal research and development. Helium is also used in several military weapons, and border patrol monitoring blimps.
When Congress returns to session after Labor Day, they will only have two weeks to discuss and come to pass the proposed bill, the Helium Stewardship Act of 2013 (S. 783), avoiding a shutdown.
The Helium Stewardship Act of 2013 would allow the Federal Helium Reserve to continue operating in three phases. In the first phase, the reserve would largely operate as it is now under the current system through September 30, 2014. The bill ensures a smooth transition away from federal ownership by establishing an auction of 10 percent of the helium in the reserve, beginning in fiscal year 2015, with an additional 10 percentage points added to the auction every year. In the third phase, the reserve would continue to operate only to supply federal customers.
The House of Representatives passed a version of the bill in April with nearly a unanimous, bipartisan vote; however a Senate version of the bill is being held up. The House Natural Resources Committee is exploring ways of developing new sources of helium to ensure an adequate supply for the longer term.
In response to the nationwide reduction in helium supply, many balloon companies are developing innovative balloon design ideas that require little to no helium.
“The current situation is unprecedented in the balloon industry. We’ve taken for granted that there would always be plenty of helium,” says burton+BURTON™ founder and President Maxine Burton, a balloon and gift wholesaler. “We’ve spent the last few months learning what works and what doesn’t, and we look forward to sharing this information with our customers. This has unexpectedly opened a market for products, both existing and new. As an industry leader for over 30 years, we are pleased to take the leadership position of tackling this issue head-on.”
As for Howe at Richie’s Florist, the topic remains unclear. “I will continue to sell our current supply, but I remain hesitant on reordering future products until the situation is clearer,” said Howe.
“With new technologies that are being developed in the balloon industry,” said Howe, “Nothing will replace the typical helium-filled balloon bouquet.”