Iran war deflates critical helium production supplies

Zoom out: For high-tech and medical applications, Gavin Harper, a critical materials research fellow at the University of Birmingham, explains, there is no replacement for helium, calling it a "fundamental physical constraint."

• It keeps magnets in MRI machines cool and is used in various stages of semiconductor production, such as in the etching process where unwanted materials are removed to form chips' patterns.

Context: QatarEnergy announced in March it was halting production of liquefied natural gas and "associated products" following attacks on its facilities in Ras Laffan and Mesaieed.

• Helium is a byproduct of natural gas production.
• QatarEnergy's CEO and state minister for energy affairs told Reuters last month that disruptions could last three to five years while the country repairs its LNG infrastructure.
• On top of that, shipping logistics for helium are "very time-critical," Harper says via email. It's transported as a liquid, and being trapped in transit risks it warming and being lost to the atmosphere as a gas.

Threat level: Distributors are already rationing who gets what, Cliff Cain, the president of helium exploration company Pulsar Helium, tells Axios.

• Some customers are being told they'll only get half of their normal supply.
• Phil Kornbluth, a consultant who specializes in the global helium business, says medical uses for helium and semiconductor chip manufacturing will be prioritized at suppliers allocate their resources.

Reality check: While consumers will likely see the impact most directly when they try to buy party balloons, supply constraints could ripple silently through the economy.

• Helium shortages could limit semiconductor manufacturing, which could "affect the supply of nearly every good, from cars to dishwashers," Sameera Fazili, the former deputy director of the National Economic Council, said in March.
• Qatar's diminished helium production should be a sign for nations to understand the element's importance and boost production, Cain said.

• "You can try to explain away a black swan event until it happens, and then everybody's rushing to figure out, how do we fix it?" he said.

Worth noting: The global market could could eventually offset more than half of the loss from other sources by repositioning container ships, says Kornbluth.

• "This initial period before these containers can get out and get to where they could pick up replacement supply, that'll be the tightest period," he says.
• Reuters reports that South Korea, home ​to some of the largest chipmakers, has sufficient stocks until at least June and that companies are paying premiums to secure inventory — mainly from the U.S.
• But the "big question mark," Kornblith says, is how long until the Strait of Hormuz opens and Qatar's LNG starts flowing. "The story is not over yet. And it might get worse."

The bottom line: Harper says building a sustainable helium supply is "a long-term play." It could include decentralizing production, diversifying the supply chain or aggressively recycling.

• It may make him a "killjoy," he admits, but perhaps the best place for such a critical resource is not inside a mylar birthday balloon.

Go deeper: The massive economic impact of the global energy crisis