The Problem With (Affordable) Helium

If I had had space, I would have included a subtitle for this piece as follows: Things do not have to run out to become unavailable. So, now you have a general idea about the problem with helium, a problem to which I'll return shortly. But, first let me discuss the broader issue my subtitle enunciates.

How many times have you heard someone say that we have huge quantities of such and such a resource underground (or even in seawater), so there is nothing to worry about? It is hard to know where to start with this simplification because it comes from minds that are so egregiously uninformed.

There are dozens of reasons that things can become unavailable before they ever "run out." It is a favorite ploy among are willing to pay the most. It's a small part of the market, but it shows that the distribution of helium in a higher cost world might not turn out to be what most of us would think is socially desirable. Many research labs might not be able to afford as much. Other critical uses in medicine and computer chip manufacture might be curtailed or result in considerably higher costs for medical diagnosis and electronic equipment.

All this is to demonstrate that a resource does not have to "run out" in order for it to become unavailable to large numbers of people. There are plenty of molecules of helium in the Earth. But the cost of getting them out for all who want to use them, even for critically important purposes, might be too high for many to bear.

The same analysis can be done for other finite resources, oil, coal, natural gas, rare earth minerals, lithium and many more. The cornucopians like to say that we will never run out of what we need. The market will provide the necessary incentives for getting more out of the Earth more efficiently or for finding substitutes. We will always have what we need when we need it at prices we can afford in the quantities we require.

But, there is no guarantee that this will happen in every instance that we want it to. As such the above assertion is simply an article of faith in the economics field, born of an era in which the rate of resource extraction was rising continuously and limits were nowhere in sight.

Now, limits do not mean that we have "run out." Instead, they mean that we cannot produce at a higher rate or that we cannot produce at a higher rate without significantly higher prices or that no viable substitute, competitive in price and sufficient in quantity, can be found.

The socially desirable outcomes we might want to see with regard to resource use do not have to be mandated. Market-based incentives--which must include high taxes on the resources we want people to use less of--can go a long way quickly to bring our choices in line with our long-term best interests.

It's either that or we can party 'til the remaining resources of helium and other critical substances are reduced to the point where we no longer have enough time to make a transition to a society that can adapt to their loss of affordability.

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Written By: Kurt Cobb