Helium gas supply shortage

By: Loh Li Min

Based on the article from a text book which established on 5^th of December 2007, it is basically about the shortage problem of helium gas because of the increasing demand of helium gas.

Due to the short supply of helium gas, the supply curve will shift to the right as the quantity supplied will decrease while the price of helium gas will expand. In graph (A), short supply of helium gas reduces quantity supplied at any given price shift the supply curve to the left. When the supply curve shift to the left, the equilibrium price will rise and the equilibrium quantity falls. Here an increase in price of helium causes the supplier to supply less helium so the supply curve will shifts from S to S1 which affects the equilibrium price of helium to increase from P to P1, while the equilibrium quantity fall from Q to Q1.

Panel (A)

According to the ‘title of article’, Mr. Vidali was the first man to discover that liquid helium is the coldest substance known on earth when helium gas is being pressurized and this will create the phenomenon that similar to the outer space. However, this will not work if there is insufficient helium gas.From the article it mentioned that for the past 50 years the scientific research uses helium gas in a large quantity in the research, this proved that there was a high demand on helium gas during that time.Thus, obviously the demand for helium gas will increase and the demand curve will shift to the right since the price of helium gas increases and the price also increases. From the graph (B), we can see that the increase in quantity demanded of helium shifts the demand curve to the right. The equilibrium price and the equilibrium quantity both rise. Next, the demand curve shift from D to D1, which causes the equilibrium price to rise from P to P1 and the equilibrium quantity to rise from Q to Q1.

Panel (B)

In additions, shortage of helium gas arises when market price of helium gas is below the equilibrium price. The shortage of helium gas causes the price of helium gas to rise, decreasing the quantity demanded of helium gas and increasing the quantity supplied of helium gas until the equilibrium price is attained. In panel (C), there is a shortage because the market price of P1 is below the equilibrium price, the quantity demanded (Q2) exceeds the quantity supplied (Q1). In this case, suppliers can take the advantage of the shortage by raising the price of helium. Hence, the price adjustment moves the market toward the equilibrium of supply and demand.

Panel (C)

Based on the article,the combination of oil and natural gas is the easiest way to produce helium gas but this method have been tapped and disapproved. This again proved that the supply curve of helium gas will shift leftward.[Refer to panel (A)] In this case, happen that the suppliers are giving the top priority to the medical clients who need helium for medical while reducing shipments to their most visible customers. On the other hand, clients who use it for unimportant purposes move to the bottom of the delivery list. Besides that, the short supply in helium will also create problems in our society such as lack of job employment opportunities and also business failure that causes a company to collapse. This is because helium gas is very common used in many big companies. The high price of helium causes the cost of production of a company that uses helium increases. The cost of production of a company increases will cause a company’s profit to decrease. Worse come to worse, it will affect the whole organization cannot function well and cutting the cost of the company by firing staff to bare the high price of helium. Therefore, the shortage in helium will create uncertainty in the business operations. There was an increment in the price of helium gas due the short supply of helium. For instance, a tank that used to cost about $100 now cost about $300 which is actually tripled of the original price. It means usually a helium user has three tanks on hand but now he has just one. In year 2011, helium prices increased to $2.73 per cubic meter ($75.00 per thousand cubic feet) of gas delivered.

Besides that, helium is a nonrenewable resource produced by the radioactive decay of thorium and uranium and it has a wide variety of functions. It is predicted that helium will be depleted in the year 2018 if helium is continued to be produced.It is hard to imagine that the world is without helium as it brings many benefits for industry and medical.For example, the MRI machines may not function well as the MRI machine helps to determine the severity of certain injuries in the patient’s body.Furthermore, researches at big research centers which are aimed to find out cures for fatal diseases and creating new sources of energy are forced to slow down if shortage problem of helium gas persists.Hence, this shows that helium is significantly important to all of us and it is not only the matter of the demand on balloons and the price itself.

Last but not least, the large industrial manufacturers are being aware of the shortage of helium gas. Hence, they are trying to design the equipment to recycle the helium gas. The conservation and helium recycling is one of the best ways to maintain the current supply level. According to current legislation, helium is being sold to the company at cheap price and they are offering no sort of incentive to recycle the helium gas after they use it. The solution to overcome the short supply today is persuading the company to recycle the helium gas after used by intervening and higher the price of helium. This is because the law of demand and supply claim that the price of helium gas adjusts to bring the quantity supplied of helium gas and the quantity demanded for helium gas into balance, which mean the price of helium gas will keep increasing until the shortage problem is being overcome.