Construction Economics

Asphalt

Asphalt is the residue from the crude-oil refining process and is primarily used for road construction. The price of asphalt has doubled in some states since early 2008. The rapid price increases for asphalt and other construction materials have caused states to postpone or reduce their plans for construction and repair of highways and roads. According to the Bureau of Labor Statistics, the producer price index (PPI) for liquid asphalt at the refinery jumped 12% in June from May 2008, and 52% from June 2007. The PPI for asphalt paving mixtures and blocks, which includes the aggregate (crushed stone) that is mixed with liquid asphalt binder, rose 6.7% for the month and 17% over 12 months (view chart). In addition, several states have reported shortages of liquid asphalt or the petroleum-derived polymers that improve asphalt pavement performance.

AGC will provide updated information regarding asphalt pricing and supply. You can help: send pricing sheets, state asphalt indexes or other news to youngj@agc.org.

Hot Topics

  • Guidance on Material Price Increases and Availability. The Federal Highway Administration (FHWA) issued guidance to all of its state Division Administrators on recommended steps for helping state DOTs deal with the unprecedented increase in the cost of various construction materials and availability of other products. The entire guidance has been reproduced to assist you in dealing with your state DOT on federally-assisted contracts. AGC Highway Facts Bulletin, 7/31/08
  • Energy Information Administration. According to the Energy Information Administration, U.S. refiners have been producing less asphalt in most months of 2008 than in the same months of 2007. (Product supplied) Refiners have been changing the type of crude oil they buy and the machinery they use to process it in order to maximize production of fuels, leaving less asphalt as a residual. (Refinery Yields)
  • Surging Fuel, Asphalt, Steel Costs ‘Clobber’ Construction Budgets, AGC Says. "Surging prices for diesel fuel, asphalt, steel and other materials are clobbering construction budgets," Ken Simonson, Chief Economist for The Associated General Contractors of America (AGC), said today. Simonson was commenting on the producer price index (PPI) for June reported today by the Bureau of Labor Statistics (BLS). AGC Press Release  (07/15/08)
  • Asphalt price hikes, shortages stymie plans. The skyrocketing cost of crude oil has led to big price increases in asphalt in recent weeks, as well as shortages of asphalt and of an ingredient that extends its life. Denver Business Journal  (07/14/08)
  • Concrete replacing asphalt as oil prices continue to rise. Not many winners have emerged from the fallout of soaring oil prices. St. Louis Post-Dispatch (07/14/08)

Related Links

The ConsensusDOCS 200.1 Potentially Time and Price-Impacted Materials Amendment is a standardized, three-page Amendment that provides an Owner and Contractor a baseline price and calculation method for potential adjustments to material prices.

The AASHTO Subcommittee on Construction, Contract Administration Section compiled a survey on the use of price adjustment clauses in each state.

Illinois Department of Transportation' Bituminous Price Index.

Staff Contact

Ken Simonson
Chief Economist
Government & Public Affairs
Associated General Contractors of America
2300 Wilson Boulevard, Suite 400
Arlington, VA 22201
USA
Phone: (703) 837-5313
Fax: (703) 837-5407
http://www.agc.org