Although asphalt prices drifted downward last year, expect them to climb back up by 5% to 10% this year thanks to higher crude oil prices. Higher energy prices also will drive concrete prices up 3% to 5%, according to Ken Simonson, chief economist for the Associated General Contractors of America. Wooden roads, anyone?
As for what's happened up to this point, Simonson says, asphalt consumers have been the victims of a perfect storm since 2004.
Following the 2005 passage of the federal SAFETEA-LU transportation funding bill, highway departments began clamoring for more material. Unfortunately, their need coincided with a wave of refinery shutdowns for deferred maintenance and to install desulphurization equipment.
Highway-project letting slowed in the second half of 2006 and into 2007 and refineries were back online, ensuring abundant supplies of liquid asphalt. But by then, rising crude oil prices offset price reductions.
As for concrete, the drastically shrinking demand in the home-building market last year slowed a four-year rise in prices.
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