ForConstructionPros.com

For Americans, pain at the pump due to high oil prices translates into sticker shock when filling the gas tanks in their cars and trucks. For asphalt producers and contractors, however, the same high oil prices have a much broader reach, effecting everything form the cost of delivering material to the jobsite to the price of the product that is at the heart and soul of their businesses — asphalt.

Supply volatility on the world market pushing oil prices to more than $70 per barrel this summer, resulted in liquid asphalt quickly spiking to more than $400 per ton in some states. This, along with high diesel fuel prices, has sent a shockwave throughout the asphalt industry, significantly increasing the cost of the final asphaltic concrete product.

In Montana, the liquid asphalt prices reflected in 2005 bids ranged from $260 to $300 per metric ton of a standard asphalt design. This year, the same AC will cost as much as $440 per ton. Officials in Lee County, FL, have seen asphalt mix costs rise from $42.55 per ton last year to nearly $88.00 per ton this season. With the limited funds available to public officials, this translates into fewer projects completed and large projects being spread out over a longer time frame.

Dealing with volatility

Liquid AC price volatility has made the life of the asphalt contractor interesting to say the least. "Previously, the price of our asphalt would be good for a year," says Nathan Ellsworth, vice president of Ellsworth Construction Company, Tulsa, OK. "Now it's good for only 30 days."

Thirty days may suffice in other industries, but it is basically useless for a company bidding a project that may happen months down the road. "The asphalt contactor is usually the last guy on the job, and predicting the cost of asphalt is now a shot in the dark," he adds.