Helium is a critical, non-renewable element required to cool the superconducting magnets used in MRI scanners, particle accelerators, and quantum computers. It is exclusively obtained as a byproduct of natural gas extraction, where it exists in very low concentrations. Australia, Algeria, Qatar, and the US hold the majority of known helium reserves. Due to geopolitical tensions and unexpected maintenance outages at major extraction plants, wholesale helium prices recently tripled. Despite these extreme price increases, global production has struggled to expand, leading to a global shortage that has forced some research facilities to temporarily suspend operations.
Expanding helium extraction capacity is a major capital endeavor. Capturing helium requires massive cryogenic processing units to liquefy the gas at temperatures close to absolute zero. In Qatar, a major expansion project designed to capture waste helium from liquefied natural gas (LNG) production was delayed by over six years due to technical engineering hurdles and supply chain blockages. This project is not expected to reach commercial-scale output until late 2026.
Governments are increasingly viewing helium security as a strategic priority. The US government has historically maintained a Federal Helium Reserve, though its privatization has led to increased market volatility. In response, some European research councils are offering grants to subsidise the installation of closed-loop recycling systems in laboratories to reduce reliance on raw helium. However, the commercial extraction of raw helium remains highly dependent on the overall global demand for natural gas, as drilling for gas solely to extract trace helium is economically unviable.
With reference to the Extract and your own knowledge, assess whether the supply of helium is likely to be price elastic or price inelastic.
