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Helium Crisis Approaching
vrmlguy writes "Within nine years the National Helium Reserve will be depleted, according to an article in Science Daily. It quotes Dr. Lee Sobotka, of Washington University in St. Louis: 'Helium is non-renewable and irreplaceable. Its properties are unique and unlike hydrocarbon fuels (natural gas or oil), there are no biosynthetic ways to make an alternative to helium. All should make better efforts to recycle it.' (The St. Louis Post-Dispatch has a local article with quotes from Dr. Sobotka and representatives of the balloon industry.) On Earth, Helium is found mixed with natural gas, but few producers capture it. Extracting it from the atmosphere is not cost-effective. The US created a stockpile, the National Helium Reserve, in 1925 for use by military dirigibles, but stopped stockpiling it in 1995 as a cost-saving measure."
By "limited resource that a lot of people have access to", I am not referring to a tragedy of the commons situation. I am referring to a situation, say, where there are finite quantities of helium deposits within the United States, and each of these deposits is held by private ownership.
Currently, there is clear ownership, there is no significant government oversight, yet what is the net result going to be if left to the market? The helium reserves (according to the article, and I will proceed with its assumptions, as I have no view of my own on this matter) will be mostly depleted relatively shortly.
What's the cause of this? It's true, owners have an incentive to leave it in the ground if it'll become valuable in the future. However, this only works perfectly in a world of perfectly rational abstracted actors. In the real world, owners also have an incentive to eat today, rather than starving now on the hope of a big payday in the future. Once the large capital investment has been made to install helium extractors, infrastructure, etc. on the wells, it is highly improbable an owner would let that all depreciate into nothing as you wait for a highly speculative payday in the future. It is only when the shortage is actually imminent, and the payday less speculative, that owners will realistically start holding off on pumping. It would be more realistic in the real world that owners would let it stay in the land if they hadn't already tapped it, but it does not appear from the article that this is the case.
Regarding your quibble about my use of the word externality, as I understand it, an externality is an impact upon a party not involved in a given transaction, and this understanding is supported by Wikipedia. Here, the transactions in question are between helium extractors and helium buyers. Yet the negative impact is felt by future generations, who are not current parties to this, yet will have to live in a world with insufficient helium for scientific and engineering usages, if the premise of the article is to be believed. Hence, negative externality.
A great video of Jay Leno demonstrating sulfur hexafluoride: http://www.5min.com/Video/Jay-Leno-How-to-Float-a-Boat-on-Air-3542852