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RISING PRICE OF ASPHALT MAY CURB ROAD BUILDING

By Nomee Landis Staff writer (Fayetteville Observer Times, NC)

March 2, 2000 Drivers hit hard by skyrocketing gasoline prices may be dealt another blow -- in the form of delayed highway projects -- if crude-oil prices continue to rise, said a state transportation official on Wednesday.

As the price of crude rises, so does the price of asphalt, which contains a petroleum product.

No scheduling changes have yet been made to the states highway projects as a result of oil prices, said Steven DeWitt, state construction engineer for the Department of Transportation in Raleigh. But if prices continue to climb, as industry forecasters are predicting they will, the state may be forced to delay them, DeWitt said.

Its certainly an issue, he said. We dont have near enough money statewide to address the transportation issues out there. This is just one more thing. I cant tell you what the magnitude is, but there will be an impact.

Already, the state is paying more to repave and build its streets and highways.

Crude prices have jumped to about $30 per 42-gallon barrel, up from $12 a barrel at this time last year. The cost of asphalt has followed. In January 1999, asphalt cost $113 a ton, and by last month, the paving material was running $161 a ton, DeWitt said.

Asphalt is about 95 percent sand, stone or gravel. A sticky, black substance called asphalt cement accounts for the other roughly 5 percent. That substance comes from crude oil.

Skyrocketing prices A 45-percent increase in the cost of asphalt cement in the last 45 days -- and a 60-percent increase in heating oil costs in the last two months -- have sent profits into a tailspin for contracting companies.

Special clauses in the contracts between the Department of Transportation and its highway contractors protect each party from fluctuations in the price of asphalt. But steep increases hurt both, said Kermit Moser, vice president of Barnhill Contracting Co.s southeast division.

We never anticipate anything going up in the 40-to-60 percent range, Moser said. So when it does that, we take a big hit, especially on a long-term job. Its a never-ending battle to try to make a little money.

Barnhill produces asphalt using heating oil. Many of the companys projects are for the Department of Transportation.

The higher oil prices will affect transportation projects in other ways as well, DeWitt said. Higher gas and diesel-fuel costs mean it will also make hauling, pouring and smoothing asphalt more expensive.

The problem will not be confined in North Carolina. According to the National Asphalt Paving Association, 94 percent of the 2.27 million miles of paved road in the United States is surfaced with asphalt, including 65 percent of the interstate system.

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-- Dee (T1Colt556@aol.com), March 02, 2000

Answers

Thanks Dee. We design and manage lots of road construction projects in Indiana. One of our engineers reminded me that during the Gulf War the state quit putting asphalt jobs out to bid due high fuel prices. If the bids exceed the engineering estimate, they may be re- bid or canceled until prices drop. This is not good for construction.

-- trafficjam (road@construction.ahead), March 02, 2000.

Traffic jam,

Thank you for sharing this information. I felt this was an important issue when I posted it. I suspect we will see more of this. I'll keep my eyes open for any more articles of this nature. I am posting at the new board under the name Dee360Degree.

Best wishes,

-- Dee (T1Colt556@aol.com), March 02, 2000.

I'm scheduled for a new roof, this spring......what's this going to do to the cost of asphalt shingles? Sounds like it's going to hurt roofers, too.

-- Jo Ann (MaJo@Michiana.com), March 02, 2000.

Jo Ann, by far my largest y2k "prep" last year was replacing my roof last spring. One of my reasons was that it seemed very possible the cost would be much higher this year. Your cost may depend how quickly you get to it.

-- Brooks (brooksbie@hotmail.com), March 02, 2000.

JoAnn,

Yikes! Good question. I didn't think of this. Wonder if it will put the building cost up.

-- Dee (T1Colt556@aol.com), March 02, 2000.