High costs could jeopardize gains in federal funding

News AASHTO Journal June 17, 2005
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Sharply climbing costs for many products used in highway construction could erode any federal funding increases being considered by Congress in reauthorizing the federal highway and transit programs.

William Beuchner, economist for the American Road and Transportation Builders Association, recently told a meeting of highway advocates in Washington that steel prices jumped by 45% between January and September of 2004, and have remained at that level this year. Meanwhile, ready-mix concrete has increased by 23% this year, and asphalt paving mixtures by 11%.

Part of the increase is the result of the skyrocketing costs of petroleum products, which are a key ingredient in asphalt and other building materials. Also driving the upward climb is increased consumption internationally, with China and India in the lead of escalating demands.

The impact of rising prices has hit both state and local governments. Faced with a 20% increase in the price of asphalt, the Vermont Agency of Transportation recently announced the delay of $9 million in paving projects. North Carolina Highway Administrator Len Sanderson has also indicated that the state will resurface fewer roads if asphalt prices remain high.

Concrete shortage raised

Meanwhile, the Associated General Contractors has urged the Commerce Department Secretary Carlos Gutierrez to intervene to address cement shortages occurring in Washington, Oregon, Idaho, Nevada, Utah, Wyoming, Oklahoma, Texas, Missouri and Florida. AGC CEO Stephen Sandherr called the shortages “alarming” at the beginning of the construction season. He said, “We urge the Secretary to head off a crisis that could spread throughout the economy by concluding agreements with domestic cement producers to suspend the anti-dumping duty on Mexican cement.”

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