Fighting to Stay on Top

Material costs and longevity weigh heavily on the decision on whether to use asphalt or concrete.

What a difference a year makes.

In August 2008 a record price for crude oil pushed the cost of liquid asphalt - the petroleum component of asphalt pavement - through the roof. A product that normally sold for $200 to $300 per ton tripled in cost. Across the country, transportation agencies struggled to keep budgets in line; in Virginia, liquid asphalt prices reached $911 per ton; in Oklahoma the price peaked at $660 per ton.

And those prices, coupled with stratospherically high fuel costs, pushed many states' road-building budgets to the breaking point. Locally, officials with the Oklahoma Department of Transportation prepared for the worst.

"We saw price increases in all areas of transportation construction," said George Evans, director of operations for ODOT.

Roads still needed to be built and maintained, but the cost of raw materials was out of hand. It was then that some builders returned to asphalt's more durable, more expensive cousin, concrete. The price of concrete had increased, too, driven in part by high fuel costs. But for about three months, during the summer of 2008, the cost of concrete and the cost of asphalt were about the same.

And concrete's long-term durability was earning new customers.

"There was a time, during last June or July, when the price of asphalt got really high," said Jeff Seeliger, general sales manager of Dolese's concrete division. "That was an abnormal market. "

The concrete industry took advantage of the opening; the National Ready Mix Association launched a promotional campaign and worked to sell customers on concrete's durability.

 "We were seeing much more emphasis on concrete building," said Kurt Melby, executive director of the Oklahoma Ready Mix Concrete Association. "That was since oil went up over the past two or three years. "

Fast forward a year.

Oil prices have fallen, hovering around $70 per barrel. That drop pushed the price of liquid asphalt down under $400 per ton, but higher than its previous low of $200; the price of concrete leveled off.

Just as the market began to stabilize, the economy hit a wall. Wall Street tanked and states sidelined hundreds of road-building and maintenance projects. Once again, the concrete industry found itself in a fight for market share.

This time, industry officials said, they're better prepared.

"We're opening new markets that we weren't able to before," Melby said. "We're raising awareness. We're developing programs that we can take to owners and architects and engineers. "

Take, for example, parking lots.

While many builders cover parking lots with asphalt because the upfront costs are lower, Melby said concrete is a better choice.

"The maintenance cost of a concrete parking lot over 20 years is much cheaper," he said. "And concrete parking lots take less lighting because of their reflectability. There's more ambient light; it's safer. "

And concrete, Melby said, absorbs less heat, so in turn, the communities that use concrete are cooler.

While asphalt covers many thousands of miles of Oklahoma roads, Melby said new concrete technology could challenge that.

 "The industry developed 'white topping,'" he said. White topping, a play on the term 'blacktop' used to describe asphalt roads, is a thin overlay of concrete used on roadways.

"They put it on top of the road and cut it every three or four feet," he said. "It's just like putting down tile. They're doing the same thing on driveways. "

Yet even with new concrete innovations, most experts believe asphalt is here to stay.

"Sometimes you use asphalt, sometimes concrete. The conditions are different for virtually every job," said George Raymond, an ODOT engineer. "The product you use depends on the type of road and the volume of traffic. "

Plus, the asphalt industry has developed new technologies. Raymond said a polymer additive can be put in asphalt to make the road surface stronger.

"You can take the base oil and add additives," he said. "On high-volume roadways, on say an interstate, we've used a polymer additive in the asphalt, which makes it a better product. "

As both industries develop and market new products, their customers adapt. State transportation officials are hedging their bets by changing the way they issue contracts. Instead of locking into a price for asphalt, ODOT officials say they are using three-month averages to estimate the price.

 "Three-month moving averages are what we use to track estimates on our projects," Raymond said. "Our construction program is redone annually and it rebalances each year. "

In addition, price adjustment clauses can help reduce costs in some cases.

"Many states began to use price adjustment clauses years ago," Evans said. "Back in June of 2006 we started using a price adjustment clause for liquid asphalt. "

The clause can have a negative effect on costs when prices increase, but Evans said the same clause has saved the state thousands of dollars when material prices decreased.

"We feel like we reduce the risk to the contractor who doesn't have to bid in the possibility of a price increase," he said. "He gives us a unit price for the asphalt for what the price is today. "

The key, industry leaders say, is to remain competitive.

"We're driven by fuel costs," said Dolese's Seeliger. "That condition, could, perhaps, happen again. But I don't think you're going to see that type of price spike. Oil might go up to $80 or $90 a barrel, but it will go up gradually. I think the market will react more normally. "