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The idea of selling things like our strategic helium supply for $460M to "pay off the debt" would be like me selling bricks from the foundation of my house for

The idea of selling things like our strategic helium supply for $460M to "pay off the debt" would be like me selling bricks from the foundation of my house for a penny to "pay off my mortgage".

embedding-shape 7mo ago
What if it's not actually your house, but some unspecified "somebody else's", and you only stand to profit from it? Starts to make sense why some unscrupulous people would go that way, shitty as it is.
deleted 7mo ago
[deleted]
AnthonyMouse 7mo ago
$460M was for what was left after the large majority had already been sold. In the best case, "strategic reserves" are the government speculating on commodity prices. They use tax dollars to buy a commodity -- raising the price on everyone so they can hoard it -- and then more tax dollars to pay for a storage facility, and if they're lucky the price goes up by enough to pay for the storage and the time value of money by they time they sell it again. That frequently doesn't happen. In the common case it's the government subsidizing corporations -- including foreign ones -- by using tax dollars (at government contractor rates) to operate a storage facility at a loss so the industry doesn't have to do it themselves. Then, when they go to unload it, they generally unload enough to lower the market price on purpose, practically guaranteeing that the taxpayer is getting a below-market return. This unloading also has a statistical correlation with the election cycle (see also "strategic petroleum reserve") which is extra stupid. And the expectation that it will happen deters others who aren't paying government contractor rates from storing the commodity, so from a "strategic" perspective you don't get anywhere near as much of a buffer as you're paying for. If the tech industry wants a reserve of helium then they should buy some land, install some tanks and fill them with helium in years when there isn't a shortfall.
- avidiax 7mo ago
  That strategic helium reserve was from WWI, IIRC. I've heard it claimed that it was a massive oversight to sell that much helium at such a low price. Helium is a non-renewable resource. When it escapes, it just floats off into space. And it's an absolutely critical resource for MRIs, advanced science and research, and industry. And we are selling it at a price that's attractive as an amusement for children.
  - AnthonyMouse 7mo ago
    > That strategic helium reserve was from WWI, IIRC. That may have been when it opened but the current war machine has little use for dirigibles. > I've heard it claimed that it was a massive oversight to sell that much helium at such a low price. Helium is a non-renewable resource. When it escapes, it just floats off into space. Helium is produced within the earth by radioactive decay. It then gets trapped in the same pockets as natural gas, which is why it gets extracted along with the natural gas. But most natural gas doesn't undergo helium extraction. If we wanted more, we could do helium extraction on more of the natural gas. Not doing it releases significantly more into the atmosphere than was present in the reserve. But doing it is expensive so we only do it more if there is demand for more helium. The first mistake was the government hoarding that much of it to begin with. It doesn't make a lot of sense to pay a high cost for extraction in an earlier year and then pay a high cost for storage for an indefinite period of time if you're already discarding (i.e. not separating) most of it and could just extract more once you actually want it. The second mistake was unloading such a massive amount over a relatively short period of time, because then you crash the short-term price and cause people to waste the thing you spent a lot of money to extract.
- fc417fc802 7mo ago
  > In the best case, "strategic reserves" are the government speculating on commodity prices. A horrendously misinformed take. Strategic reserves have broadly one of two primary purposes. First, providing the government with the ability to stabilize market prices in the short term when volatility strikes. Second, providing a supply of an essential resource to an essential industry in the event that external supplies are unexpectedly cut off temporarily. Supply shocks are bad. The economy grinding to a halt at the whim of a geopolitical adversary or natural disaster is also bad. Ensuring a stable market is one of the most fundamental purposes of having a government at all.

The idea of selling things like our strategic helium supply for $460M to "pay off the debt" would be like me selling bricks from the foundation of my house for a penny to "pay off my mortgage".

embedding-shape 7mo ago

What if it's not actually your house, but some unspecified "somebody else's", and you only stand to profit from it? Starts to make sense why some unscrupulous people would go that way, shitty as it is.

deleted 7mo ago

[deleted]

AnthonyMouse 7mo ago

$460M was for what was left after the large majority had already been sold. In the best case, "strategic reserves" are the government speculating on commodity prices. They use tax dollars to buy a commodity -- raising the price on everyone so they can hoard it -- and then more tax dollars to pay for a storage facility, and if they're lucky the price goes up by enough to pay for the storage and the time value of money by they time they sell it again. That frequently doesn't happen. In the common case it's the government subsidizing corporations -- including foreign ones -- by using tax dollars (at government contractor rates) to operate a storage facility at a loss so the industry doesn't have to do it themselves. Then, when they go to unload it, they generally unload enough to lower the market price on purpose, practically guaranteeing that the taxpayer is getting a below-market return. This unloading also has a statistical correlation with the election cycle (see also "strategic petroleum reserve") which is extra stupid. And the expectation that it will happen deters others who aren't paying government contractor rates from storing the commodity, so from a "strategic" perspective you don't get anywhere near as much of a buffer as you're paying for. If the tech industry wants a reserve of helium then they should buy some land, install some tanks and fill them with helium in years when there isn't a shortfall.

avidiax 7mo ago
That strategic helium reserve was from WWI, IIRC. I've heard it claimed that it was a massive oversight to sell that much helium at such a low price. Helium is a non-renewable resource. When it escapes, it just floats off into space. And it's an absolutely critical resource for MRIs, advanced science and research, and industry. And we are selling it at a price that's attractive as an amusement for children.
- AnthonyMouse 7mo ago
  > That strategic helium reserve was from WWI, IIRC. That may have been when it opened but the current war machine has little use for dirigibles. > I've heard it claimed that it was a massive oversight to sell that much helium at such a low price. Helium is a non-renewable resource. When it escapes, it just floats off into space. Helium is produced within the earth by radioactive decay. It then gets trapped in the same pockets as natural gas, which is why it gets extracted along with the natural gas. But most natural gas doesn't undergo helium extraction. If we wanted more, we could do helium extraction on more of the natural gas. Not doing it releases significantly more into the atmosphere than was present in the reserve. But doing it is expensive so we only do it more if there is demand for more helium. The first mistake was the government hoarding that much of it to begin with. It doesn't make a lot of sense to pay a high cost for extraction in an earlier year and then pay a high cost for storage for an indefinite period of time if you're already discarding (i.e. not separating) most of it and could just extract more once you actually want it. The second mistake was unloading such a massive amount over a relatively short period of time, because then you crash the short-term price and cause people to waste the thing you spent a lot of money to extract.
fc417fc802 7mo ago
> In the best case, "strategic reserves" are the government speculating on commodity prices. A horrendously misinformed take. Strategic reserves have broadly one of two primary purposes. First, providing the government with the ability to stabilize market prices in the short term when volatility strikes. Second, providing a supply of an essential resource to an essential industry in the event that external supplies are unexpectedly cut off temporarily. Supply shocks are bad. The economy grinding to a halt at the whim of a geopolitical adversary or natural disaster is also bad. Ensuring a stable market is one of the most fundamental purposes of having a government at all.