Asphalt costs skyrocketing

Fri, June 13, 2008 London Free Press

By KRISTA SEGGEWISS

COST OF OIL AFFECTS ROADWORK

The byproduct of the oil refining process could put some municipal repair projects over budget

Soaring crude oil prices have sharply boosted the cost of asphalt, a move that could spell trouble for area cities in the midst of roadwork season. Many are bracing for higher bills if asphalt cement prices rise beyond budgeted amounts. Asphalt cement, used to make asphalt, has jumped in price since last fall. The heavy sludge is a byproduct of the oil refining process. Ontario's Ministry of Transportation priced asphalt cement at $633.60 per tonne in May. It's down about $40 from April, but still among the highest prices ever recorded on the index. "The price of asphalt cement has increased 35 per cent since last fall," said Joe Meyer, sales manager at London's TCG Asphalt and Construction. "It has probably pushed prices of the finished product laid on the road up 16 to 17 per cent." The hikes come after a long winter with many freeze and thaw cycles wreaked havoc on London's roads. The city earmarked 32 projects this year, about two times the amount of roadwork attempted in previous years. London has budgeted $11.8 million for road reconstruction and resurfacing. Transportation and design engineer Karl Grabowski estimates about $10.5 million of the total will go toward asphalt. Similarly, asphalt accounts for about $1.6 million of the city's $4.1-million budget for road work, he said. Asphalt costs also make up about half of the city's $18-million sewer and water main budget. The road resurfacing or reconstruction work may be affected by the rising asphalt prices. London has budgeted for asphalt priced 15 per cent higher than last year, Grabowski said. But if crude oil costs continue to rise, it may force the city to scale back on roadwork, he said. "In tenders already closed, we have a contingency clause to cover additional costs." The city plans to work within the budget. If some road projects end up costing more, lower priority work will be put off until next year. It's hard to say if rising asphalt prices will cause the city to spend more on roadwork this summer, Grabowski said. Pothole repairs will not be affected because the projects have been tendered, said transportation and roadside operations manager John Parsons. Other cities are also grappling with the higher asphalt prices. A road reconstruction project recently went overbudget in St. Thomas, said John Dewancker, city engineer and director of environmental services. The original estimate for the project was about $630,000 but the final cost grew by $106,000 to accommodate rising asphalt cement prices, he said.