Helium Shortage Affecting Vehicle Production
By now, the term ‘shortage’ probably initiates a subconscious eye roll or heavy sigh. The reality is, there are shortages left and right, and a lot of them have ties to the automotive industry. One material you may have never thought of being so vital is helium. The straight facts are it’s nonrenewable, and there’s very little left of it. So why is this shortage such a bummer?
It’s in literally everything.
Okay, not really everything; however, helium is used in many industries including the automotive, medical, industrial, electronic, and more. It’s used in MRI machines, semiconductor chips, cell phones, weapons, rocket ships, and the list goes on. Companies like Amazon, Google, and Facebook use helium for running their data centers. It is really important because it can cool to a very low temperature, which helps keep big computers and machines from overheating.
As you can imagine, these companies are fighting over supply and stocking up as much as they can in preparation for things to dry up. Helium is a multipurpose material, making it a great asset as it serves multiple purposes in the manufacturing process of semiconductors. Don’t lose hope just yet, there is work being done to try to get more.
Where did all the helium go?
Many, many years ago the government realized that helium would play an important role in the country’s defense and went on to create the Federal Helium Reserve (FHR). It supplied 40% of the world’s needs. They sold so much of the supply at a low price, they found themselves in a lot of debt and ultimately had to sell everything to make good on it. Between the poor choices by the FHR, high demand for helium, and mindless wastefulness over time - supply isn’t looking good.
Prices are rising and investors are watching.
Like other diminishing resources, helium stock is rising now that it is in high demand and investors are paying attention - specifically “Global Helium Corp” (HECOF). Global Helium Corp was created to drill and reserve helium and will be drilling in Saskatchewan Canada where there are “pure” wells that aren’t influenced by oil and gas. It is more expensive to drill there, but you can get helium faster. Plus, processing is easier and cheaper. Additionally, because reserves are dry, companies like Avanti Energy Inc are buying thousands of acres in places where helium is predicted to be plentiful. Helium used to be sourced as a byproduct of natural gas, but the world is now in need of pure helium and lots of it.
This shortage has made people realize just how much dependence on helium there is and how many industries it’s used in. And because it’s used in so many things, you can bet prices will rise and bottom lines will change as a result.
The auto industry has been hit with a double doozy, with there being a shortage of semiconductors and helium, which is used in the manufacturing of the chips. Industries are looking at alternatives to helium to soften the future blow as the price of helium increases, but that can take time.
As for now, Volkswagen's CEO is confident that price inflation in the automotive industry will somewhat stick around when semiconductor chips come back into the picture. Being that these precious and scarce materials aren’t free flowing, this may be true as supply builds back up to meet demand.
There are so many pieces to the puzzle when it comes to producing cars, and the industry has felt every blow thus far. Until materials are sourced and supply chains are put back together again, dealers are forced to deal with less inventory.
Who would have thought out of all things… helium!?
