How much has the price of natural rubber risen?

A picture is still worth a thousand words, so let’s look at a couple of them. Here’s a chart of the prices of several commodities over the past 10 years. Notice that they’ve pretty much all gone up, some a lot more than others.

Looks like rubber hasn’t gone up that much.

It does look that way, doesn’t it? Actually, though, that’s because the scale of the graph is minimizing the change in prices for the lower-priced commodities, like wheat and natural rubber. And because we’re not comparing equal values of each.

How else can we look at it?

Let’s try this approach: Let’s imagine that way back in 2001, we bought $100 worth of each of these things, and just put them away in storage.

Today, we’re going to bring them out and put them on the market. Now let’s see what our investment amounts to.

The chart below shows what has happened. Now who’s the leader? Yep, it’s clearly natural rubber, and by a huge margin. The bottom line is, if you bought $100 worth of each of those commodities in 2001, natural rubber would have been your best investment.

Why has natural rubber risen so much?

It’s a commodity everyone needs, and which is not in unlimited supply. When you think about it, not many of us need gold. After all, except for some electrical contacts, specialized medicines and jewelry, it’s not all that useful.

And the whole world is growing, isn’t it?

Absolutely. As the world has become more and more industrialized over the past decade, the need for rubber for tires has grown the same way. Think of China and the growth it has seen.

Once a poor, rural nation, it’s now an international industrial powerhouse. China’s huge and China needs tires. Indeed, China claims to be the world’s largest importer of natural rubber.

Couldn’t we substitute synthetic rubber?

There are a couple of paradoxes there. First of all, a good deal of synthetic rubber comes from oil, and as we’ve seen, crude oil is the second-fastest-rising commodity of the ones we chose to review.

And, according to experts, as the price of oil goes up, the price of synthetic rubber goes up, and that actually drives the demand for synthetic rubber down.

Can we find other sources of natural rubber?

The world has tried. Ever since the 1920s, when Harvey Firestone asked his friend, Thomas Edison, to look for substitutes, the world has been trying different plants. Right now, Russian dandelion roots show some promise (see the story on the back cover of this issue of Real Answers).

And, rubber trees have spread all over the globe. The original plant, hevea brasiliensis, was found only in the Amazon rainforest, in hot, wet, near-jungle environments.

The British succeeded in growing it in India and Southeast Asia, and Harvey Firestone, again, came up with the clever idea of growing it in Africa, in Liberia, where the company has huge plantations to this day (see the article in Real Answers, Volume 12, Issue 1, page 26, on the Web at: bridgestonetrucktires.com/us_eng/real/archive.asp)

What can be done about it?

Since supply is so hard to increase, it would seem as though we need to decrease demand. And, there are a couple of ways to do that.

Retreading is one. If you re-use your tire casings, you’re just replacing the tread portion, and that saves a lot of rubber and steel. With Bandag’s modern retreading methods, you should be able to get multiple lives from your tire casings.

That’s good for the rubber supply situation, and it’s good for you, because retreaded tires save you a lot of money over replacements.

Can we decrease the amount of rubber in tires?

That’s one of the very things Bridgestone is working on. In fact, soon, we’ll tell you about a way we’ve come up with to do more with less, a way to actually conserve rubber without sacrificing the durability or retreadability of tires.

It might not sound like a lot, but this is just the beginning! Remember, in America alone, we use at least 15 million new truck tires every single year. As people say nowadays, “We’re on it!