Rubber shortage triggering costlier tires?

According to the man who runs the world's largest producer of natural rubber, demand for the gummy stuff will exceed supply for "at least another two years." The drop in production is said to be due to both droughts and heavy rains, but the result for you is an increase in the price of tires: both Bridgestone and Goodyear have raised their prices already.
According to Bloomberg, there was a rubber surplus of 237,000 tons last year, whereas this year there is expected to be a shortage of 60,000 tons. The drop in supplies and inventory has raised the price of rubber, and as investors move to take advantage of the rise in the commodity price, rubber is being pushed to a near-record $4 per kilogram. Climate-hampered tapping seasons in places like Thailand, Indonesia and Russia mean that actual harvests haven't met predictions.

Bridgestone, Goodyear and Cooper Tire raised their prices once this year and have just announced they'll do it again in October. The uncertainty of the economic recovery over the next two quarters could keep more increases from coming soon after, but according to insiders and observers, there will be price pressures on rubber-based goods for some time.

[Source: Bloomberg | Image: Getty]