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View Full Version : Pressure from oil prices spreads



LogansPapa
06-09-2008, 12:27 AM
By Louis Uchitelle / Published: June 8, 2008

Rising oil prices are beginning to cut into the profits of a wide range of businesses, pushing many to raise prices and maneuver aggressively to offset the rising cost of merchandise made from petroleum.

Airlines, package shippers and car owners are no longer the only ones being squeezed by the ever-mounting price of oil, which shot up almost $11 a barrel Friday, to a record $138.54.

Companies that make hard goods using raw materials derived from oil, like tires, toiletries, plastic packaging and computer screens, are watching their costs skyrocket, and they find themselves forced into unpleasant choices: Should they raise prices, shift to less costly procedures, cut workers or all three?

In the United States, Goodyear Tire & Rubber is trying to adapt. Its raw material of choice now is natural rubber rather than synthetic rubber, made from oil. To sustain profits, it is making more high-end tires for consumers willing to pay upwards of $100 to replace each tire on their cars.

These steps have not been enough, however, particularly now that the cost of natural rubber is also rising sharply, along with that of many other commodities. So Goodyear has raised the prices of its tires by 15 percent in just four months.



http://www.iht.com/articles/2008/06/08/business/cost.php