Burning Too Much Rubber Could Leave a Hole in Your Pocket

Don’t look now, but tire prices are surging again, as they have been throughout the year, and motorists can expect to see more price increases on tires shipped to the market before or after June 1, 2011, the start of the summer driving season, AAA Mid-Atlantic and tire manufacturers say. Blame it on the increasing cost of the raw materials, including rubber and petroleum, used to make tires, commercial tire makers say.

Consumers, who already know that the high cost of crude oil is responsible in part for the extremely high gasoline prices they have been paying for months, might be surprised to learn that expensive barrel of petroleum is also pushing up the cost of tires, observes AAA Mid-Atlantic. Surprisingly, “an entire barrel of crude oil is required to produce just one pair of truck tires,” according to the tire industry.

“The cost of owning and operating a car is already on the increase this year primarily because of the rising costs of petroleum-based products, such as gas and diesel fuel. Now, motorists are discovering that tire prices are being impacted by that too,” said Martha M. Meade, AAA Mid-Atlantic’s Manager of Public and Government Affairs. “Petroleum is a key component of tires, up to 20 percent in some brands, and both motorists and the tire shops that sell them are feeling the pinch.”

Approximately 55 percent of the material used in conventional tire is petroleum-derived, including synthetic rubber and other polymers, according to industry sources. As a result, a growing number of commercial tire makers are announcing price increases for their products from nine percent up to 15 percent. Even the biggest tire manufacturers out there, including Michelin, Goodyear, Cooper, Bridgestone, Continental, and Yokohama, have already increased prices on passenger and light truck replacement tires this year, according to industry sources and watchers.

Increasing raw material and petroleum prices have retailers paying anywhere from 5 to 12 percent more for tires. That increase not only means higher costs for them but for their customers too. Tire makers complain the price of rubber and other raw materials have been soaring, and that is forcing them to raise their prices to keep up.

According to one manufacturer, “the costs of Malaysian SMR 20 natural rubber” rose by 177 percent during 2010 alone. Depending upon the brand and the manufacturer, the cost of rubber can account for 25 percent of what a company spends on raw materials. On top of that, “petroleum-based synthetic rubber” can “make up another 25 percent” of the cost of tires, according to news reports.

This year, the big increase in driving costs is primarily due to large increases in fuel, tire and depreciation costs, according to the 2011 edition of AAA’s annual “Your Driving Costs” study. The cost of tires had the largest percentage increase, rising 15.7 percent to 0.96 cents per mile on average for sedan owners, the study shows.

The rise in costs of raw materials, energy and transportation has led to notable tire price increases in recent years and 2011 is no exception, Meade notes. “Also contributing to higher average tire costs is a trend by automakers to equip their sedans with premium grade tires as original equipment,” Meade said.

And when motorists cannot afford to pay more, they settle for either used or lower quality tires – leading to earlier replacement.

“When you’re ready to replace the tires on your vehicle, it is best to replace all four tires at the same time with quality tires of the manufacturer’s recommendation,” said Jeffery Boone, an ASE Master Technician with AAA Mid-Atlantic Automotive Services. “But if you’re only able to replace two at a time, replace the rear tires in order to guarantee maximum vehicle stability.”

With tire prices increasing, some consumers face the temptation of purchasing used tires. However, that might pose a risk to motorists, forewarned AAA Mid-Atlantic and the Rubber Manufacturers Association (RMA). “Keep in mind, your tires are the only part of the car that has direct contact with the road,” said Meade. “Tires affect your vehicle handling, ride, braking and safety.” What is more, “used tires may have been exposed to improper service, maintenance or storage conditions and may have been damaged, which could eventually lead to tire failure,” the RMA cautioned.