Global helium shortage plays into Party City's decision to close 45 stores this year

A federal storage facility near Amarillo produces more than one-third of the world's helium supply.

With graduation parties on the horizon, a global helium shortage will likely make it harder to find those celebratory balloons and yard ornaments.

The shortage also is being blamed for a decision by Party City, the chain that specializes in party planning supplies, to close 45 stores this year. The New Jersey-based company announced the closings Thursday but has not yet identified the stores.

Party City operates 16 locations in Dallas-Fort Worth. It has 870 stores in the U.S. and Canada.

"Each year, Party City typically closes 10 to 15 stores as a part of our prudent network optimization process and in response to ongoing consumer, market and economic changes that naturally arise in the business," CEO James Harrison said as part of the company's quarterly earnings announcement.


Though the retailer's quarterly revenue rose 1% to $513.1 million, the company cited the helium shortage for a drop in comparable sales. For example, its sales of Mylar balloons were down 8%.

A transcript of the company's earnings call with Wall Street analysts includes 54 references to helium and its impact on results.

Party City said it has signed an agreement with a new source of helium that could result in a 2½-year supply, beginning later this summer. It did not identify the new source.

"We believe this new source should substantially eliminate the shortfall we are experiencing ... and improve our ability to return to a normal level of latex and metallic balloon sales," Harrison said.

Helium prices have been rising for several years from the shortage of the colorless, odorless gas. The non-renewable resource is used in party supplies, space flight, medical research and deep-sea diving.

A big reason for the shortage is that about 75% of all the helium comes from just three places: the Federal Helium Reserve in Texas, Ras Laffan Industrial City in Qatar and Exxon Mobil in Wyoming, according to gas-trade publication

The federal reserve, located 12 miles northwest of Amarillo, produces more than one-third of the world's helium supply, but its supplies are being sold off. The reserve was established by the Helium Act of 1925 to provide the gas for airships and later as a coolant during the Cold War and Space Race.

The federal government stored 44 billion cubic feet of helium in a natural gas reservoir at Cliffside. It was injected into porous rock 3,000 feet below the Earth's surface during the 1960s. This rock holds gas like a sponge holds water, according to the U.S. Department of the Interior.

By the 1990s, the federal government decided it didn't need as much helium on hand for national defense and began drawing down the Texas reserves. Private companies are now trying to find new sources of helium. Even though helium comes out of the ground, it is mixed in with natural gas at varying concentrations and requires processing.

"When folks drill for gas or they drill for oil or they drill for helium, they're doing so ... with the geological expectation of what that field holds," Harrison said. "Mother Nature will ultimately determine whether or not those fields have the adequate amount of helium to reach the goals that we set."

Helium at a glance

What is it? Helium is odorless, colorless and tasteless gas.

Where does it come from? In the United States, it is found in Texas, Kansas, Colorado, Utah and Wyoming. It occurs with other gases in the ground, including natural gas.

How is helium produced? When a gas pocket containing recoverable amounts of helium is found, a well is drilled to release it. The gas travels by pipeline to a processing plant where the helium is separated out from the other gases.

Read more about helium and the storage facility near Amarillo on the U.S. Department of the Interior website.




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