The Great Balloondoggle

Helium, the second lightest element, is most familiarly known as the gas that makes children's balloons rise to string-length heights. It also has scientific and military uses considered strategically important by the Federal Government. Helium has appeared on military embargo lists since before World War I, when the Allies used it in dirigibles.* Today it is used to lift weather balloons, to maintain pressure in liquid-propellant rockets and as a coolant in nuclear power plants. In liquid form, it provides supercool temperatures for laboratory experiments. Thus it seemed a sensible idea when in 1960 the Government, faced with possible shortages of the relatively scarce gas, set up a program to stimulate helium production. Instead, the plan has turned into the Great Balloondoggle--a federal giveaway that has enriched a few private developers, cost the taxpayers millions of dollars and resulted in the accumulation of a 37-year supply of helium.

In the Hole. The Helium Conservation Act of 1960 locks the Government into contracts that do not allow for changes in either technology or demand. Under terms of the agreements with four helium producers (Northern Helex, Cities Service Helex, National Helium and Phillips Petroleum), the Bureau of Mines must annually buy from them increasingly large amounts of helium (4 billion cubic feet this year) at $12 per thousand cubic feet. But because of new production techniques, the companies can now produce helium, which is found in natural-gas fields, for far less than that. Furthermore, the Bureau of Mines is committed under law to sell the gas at $35 per thousand cubic feet--a requirement originally intended to make the program selfsupporting. The private developers, however, can sell on the open market any helium that the Government does not buy; their current price is $25 per thousand cubic feet.

As a result, civilian users, who formerly relied on federal supplies, have begun to buy on the private market. (Government agencies are required to buy from the Bureau of Mines and are forced to pay the federal price of $35 per thousand cubic feet.) Helium producers, making handsome profits, have refused to renegotiate their contracts. Thus the Government has been forced to continue buying helium in the same quantities as were needed when it was a monopoly seller, though it has fewer customers to sell it to. Result: it has acquired a massive oversupply of the gas. The stockpile rests in a huge cavern twelve miles northwest of Amarillo, Texas. So far, 28.5 billion cubic feet of helium have been pumped into the natural storage area, and more goes in daily. In all, the Government spends about $48 million annually to buy the gas. Says John F. O'Leary, former Bureau of Mines director, who first brought the Balloondoggle to public attention: "The program is a goddam waste of money. It's that simple."

Forced Buying. Over the protests of a well-financed lobbying group called the Helium Society, which has installed former Astronaut Scott Carpenter as its president and argues that future shortages are still likely, the Government finally decided to act. In January, Fred Russell, then the Under Secretary of Interior, announced termination of the helium contracts within 60 days. But three of the contractors obtained a federal court order forcing the Government to continue buying helium "until further notice." Last week the Government appealed the decision. But until the case is tried, it must keep on squirting excess helium into that big hole in the ground in Texas--and pumping dollars into the developers' pockets.

* Germany, with no access to the world's few known helium sources, was forced to use hydrogen, which is lighter than helium but dangerously explosive.

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