Michael Victory
What is "driving" inflation?
By Michael Victory
The cost of driving has gone up.
Have you purchased any tires lately? If you have, maybe you were as shocked as I was. I recently paid $1000 for four tires for my station wagon. This represents a cost of more than $200 per tire. Maybe I paid too much, but my car was due for inspection, and I needed tires. It doesn't seem like that long ago when I paid $400 for a set of tires.
Why is this happening? Why are tires so expensive?
Here's what I found out. It seems 75% of all virgin rubber is controlled by an outfit called the International Rubber Coalition. This is a cartel, like the oil cartels who control prices by controlling output.
Rubber trees are grown in wet climates. The major players in the trade are Thailand, Indonesia and Malaysia. They are currently trying to get Vietnam to join the cartel, and if they do, this will give them even more control of the world's production of rubber.
In 2005, there were 250 million cars registered in the United States. According to Wikipedia, there are about 700 million cars on the planet and the number is set to double over the next 30 years. That would mean 1.4 billion cars, or 5.6 billion tires, not counting spare tires, motorcycle tires, ATV tires, bicycle tires and any others that I missed.
Trying to find alternative forms of energy, especially for transportation, has many benefits. A cleaner environment and becoming less reliable on foreign oil are only two. If you believe peak oil theorists, the cost of oil over the next few decades is set to explode.
Perhaps we should be equally as concerned with finding a transportation alternative to rubber, one that doesn't include oil as an ingredient.
Who knows what the future holds for the price of new wheels. Likely it will go up even more and make $200 a tire seem like a real deal.
© Michael Victory
March 30, 2010
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The cost of driving has gone up.
Have you purchased any tires lately? If you have, maybe you were as shocked as I was. I recently paid $1000 for four tires for my station wagon. This represents a cost of more than $200 per tire. Maybe I paid too much, but my car was due for inspection, and I needed tires. It doesn't seem like that long ago when I paid $400 for a set of tires.
Why is this happening? Why are tires so expensive?
Here's what I found out. It seems 75% of all virgin rubber is controlled by an outfit called the International Rubber Coalition. This is a cartel, like the oil cartels who control prices by controlling output.
Rubber trees are grown in wet climates. The major players in the trade are Thailand, Indonesia and Malaysia. They are currently trying to get Vietnam to join the cartel, and if they do, this will give them even more control of the world's production of rubber.
In 2005, there were 250 million cars registered in the United States. According to Wikipedia, there are about 700 million cars on the planet and the number is set to double over the next 30 years. That would mean 1.4 billion cars, or 5.6 billion tires, not counting spare tires, motorcycle tires, ATV tires, bicycle tires and any others that I missed.
Trying to find alternative forms of energy, especially for transportation, has many benefits. A cleaner environment and becoming less reliable on foreign oil are only two. If you believe peak oil theorists, the cost of oil over the next few decades is set to explode.
Perhaps we should be equally as concerned with finding a transportation alternative to rubber, one that doesn't include oil as an ingredient.
Who knows what the future holds for the price of new wheels. Likely it will go up even more and make $200 a tire seem like a real deal.
© Michael Victory
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