Road Projects a Casualty of Oil Crisis

Aug. 2, 2006 — -- What do the gas flowing through your car and the black asphalt under your tires have in common? Both are derived from crude oil, and as the price per barrel reaches record levels around the world, the cost of asphalt has sizzled and thrown budgets for road construction out of whack.

Because petroleum is one of the main ingredients used to make liquid asphalt, asphalt prices have skyrocketed, along with global oil costs. So if record gas and oil prices continue to climb, motorists may feel the effects -- literally -- as they drive over the nation's aging, cracking, potholed roads.

According to the American Road and Transportation Builders Association, the average cost of asphalt has increased by roughly 30 percent since last summer. That increase has followed the inflation of oil prices in the past year, which have soared even higher in recent weeks over concerns about a supply disruption from the Middle East amid the continued fighting between Israel and Hezbollah. The cost of a barrel of oil climbed above $75 this week, near the record-high levels set early last month.

In California, asphalt cost $359 per ton last month, according to the California Department of Transportation Paving Asphalt Price Index. That's up from $272 per ton a year ago. This sharp rise in asphalt costs could lead to a longer wait for road and highway projects as cities and states try to scrape together additional funding to handle unexpected costs for existing construction projects.

The problem is not just limited to California. States across the country face similar situations.

"We're very concerned about this, and we are closely monitoring it," said Patrick Cooney, communications director for the Oregon Department of Transportation.

Cooney said the state has not had to scale back on any road construction projects yet and tries to include clauses in its contracts that prevent it from being hit with escalating material fees.

According to the ABC affiliate WHOI in Peoria, Ill., an escalation clause has helped the McLean County Highway Department in central Illinois get out of paying for a 54 percent increase in the cost of asphalt since May.

Rowe Construction, the company contracted by the department to add four miles of asphalt to an old highway in McLean wasn't so lucky. According to WHOI-TV, the contractor now has to cover all the additional costs.