The rubber industry needs to pay close attention to how the oil business operates. Now this is how to gouge . . . uh . . . successfully increase prices. Compared to Big Oil, Little Rubber is a rank amateur.
As I write this, gas prices are busting the $2-a-gallon barrier here in Akron. That might be viewed as cheap to motorists in Chicago and especially Detroit. Perception is everything: When I filled up on $1.53-a-gallon gas last week in Vermont, I thought I was getting a deal.
In the rubber industry, companies grasp at excuses to raise prices—higher environmental costs, increased labor expenses, the need to invest in technology and, dare I say, higher oil prices. But in effect, only supply and demand pressures seem to result in a price hike.
The oil biz approach is much more successful. What you do is come up with a multitude of seemingly plausible factors, then get everyone to blame each other. OPEC oil hitting $30 a barrel, the introduction of ethanol to produce cleaner emissions, a broken pipeline, low inventories, summer driving demand—this is why gas prices have soared. And, anyway, ethanol is the Environmental Protection Agency´s fault.
The EPA says that´s bull. Meanwhile, it´s an election year, so we´ve got Democrats blaming greedy Big Oil, and Republicans attacking Clinton-Gore administration policy for the price hike. Hearings will be held, righteous anger expressed, blah, blah, blah.
We do have some hope for relief at the pump, now that an investigation of pricing has been launched by the U.S. Justice Department. I wonder if that will take less time than the 41/2 years the department spent deciding the tire industry wasn´t fixing prices, unless keeping them way too low is a crime.
If only rubber were as precious as fuel—just think of the possibilities.
Ah well, one can dream. Gotta go now: I´m driving the 100 miles to Pennsylvania, towing my 40-gallon-tank boat behind my gas-guzzling SUV to fill up on $1.61-per-gallon gas. I did the math—it works.
Noga is editor of Rubber & Plastics News.