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Road projects stalled by high oil prices

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by Daily Commercial News last update:Jul 17, 2006



It could be a rough road ahead for motorists this summer.

Repaving projects are being postponed or cancelled because of the rising cost of oil, the source of asphalt as well as of diesel fuel for heavy equipment.

Around Cabot, an 11-kilometre stretch of U.S. Route 2, a main highway across northern New England, has been dropped from the state’s list of paving projects for the year because bids have been higher than budgeted.

The full effect across America will not be known until Congress passes a new transportation spending bill, probably this month.

Then states will know how much federal funding they will get.

But crude-oil prices have climbed about 75 per cent from two years ago, and an industry publication reported in April that the national average price for asphalt was up almost 13 per cent from a year earlier.

Local effects can be much larger.

Phil Anderson of Exclusive Paving in Fairbanks, Alaska, said the refinery that provides his asphalt is only eight kilometres away but the price of asphalt has bumped up in the past year to $305 a ton from $185.

Oil prices affect the cost of roadwork in other ways.

Terrill Temple, county engineer for three Mississippi counties, observes that when heavy dump trucks get five or six miles per gallon, “yes sir, it has a big impact.”

Contractors are also paying more for the heating oil used to heat the asphalt so it can be mixed with sand or stone.

Illinois has cut roadwork, leaving contractors scrambling for jobs with local governments, said Kankakee County engineer Jim Piekarczyk.

More contractors bidding on fewer jobs would normally produce cost savings, but this has been largely cancelled out by rising oil-product costs, Piekarczyk said.

Highway engineers are running into price increases for other materials as well, including concrete, steel and the sand, stone and other aggregates that get blended with asphalt. Many of these increases stem largely from the energy costs of producing the materials.

Vermont increased its paving budget this year by about 20 per cent to $40 million. But the state will not be paving 20 per cent more road.

“It’s unfortunate,” said Dawn Terrill, state transportation secretary.

“We’re only going to be able to maintain the volume of work we had been doing.”

The Associated Press

last update:Jul 17, 2006

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