Another Crude Reality

By Jim Carroll, Erie Times-News, Pa.

Jun. 1–The price of a smooth ride is higher than ever.

In fact, it might be too high for some area roads this summer.

Record prices of crude oil that have drivers facing $4-a-gallon gas are also pushing up the cost of the blacktop and diesel fuel that crews use when paving streets and highways, which could set back some paving programs this year.

"Overall, the price of oil has been devastating," said Jim Cooper, a Pennsylvania Department of Transportation municipal services specialist who works as a liaison to local municipalities in this region.

Liquid asphalt, the gooey, refined-oil substance that holds blacktop together, sold for between $322 and $338 a liquid ton during the 2007 construction season, and officials then considered the price steep.

This year, crude oil prices sent the price index of liquid asphalt in this region to $372 a liquid ton in April, according to the Pennsylvania Asphalt Pavement Association, a Harrisburg-based trade group that represents asphalt plants and related businesses.

In May, that price index jumped to $403 a ton, and on Friday the index for June was posted at $482 a ton for northwestern Pennsylvania. The price index in eastern Pennsylvania is even higher at $517 a ton.

"I was shocked when it went over $500," said Ronald Cominsky, executive director of the Pennsylvania Asphalt Pavement Association.

"I was expecting it to approach $500, or even go higher, but I looked for that toward the end of the construction season," Cominsky said.

Liquid asphalt only makes up about 5.5 percent of the weight of a ton of blacktop. Most of the bulk comes from aggregate — the small stones that are added to the mix.

But Cominsky said high world oil prices hit almost every facet of the highway construction industry.

Diesel fuel, now selling at record-high levels, powers not only dump trucks and paving machinery, but also ships and trucks that make deliveries.

And if that were not enough, municipal officials say a change in state rules might require them to bid some highway milling and resurfacing projects at "prevailing wages" — the higher wages mandated for public works construction projects — instead of the lower wage levels for public maintenance work.

"I don’t see any end in sight," Cominsky said.

Getting their money’s worth Cominsky said refineries are trying to squeeze as much high-value product — gasoline, aviation fuel, diesel fuel and heating oil — out of a barrel of crude oil as possible.

And that leaves less crude left for liquid asphalt, or asphalt cement. Plus, Cominsky said refiners are looking to squeeze more profit out of the asphalt they do sell.

Municipalities that were paying $45 to $48 a ton for blacktop several years ago are now looking at blacktop in the range of $60 to $70 a ton, Cominsky said.

"From the numbers that PennDOT has given us, the dollar value of paving should be about the same as last year, but the miles of roads that they pave will be decreased because the dollar is not going as far," Cominsky said.

"The people who will really feel the impact are the municipalities and the townships," Cominsky said. "Those are the people who operate on a fixed budget."

Elam Herr, assistant executive director of the Pennsylvania State Association of Township Supervisors, said municipal officials might face a tough choice.

"Either the amount of roads that are paved and repaved are going to be decreased, or (municipalities) are going to have to raise money through taxes," Herr said.

PennDOT this year is paying $61.30 a ton and $65 a ton for blacktop under a $2.6 million contract to pave eight roads in Erie County this summer.

"What the eventual effect of this could be is to make it a lot more challenging to take care of the (highway) system," said George Backo, acting PennDOT maintenance manager for Erie County.

Rick Supel, PennDOT maintenance manager for Crawford County, said it is hard to predict what will happen.

"We are assuming that prices are going to be high the rest of the summer, and as the price of asphalt goes up, the number of miles of road paved go down," Supel said.

Rising cost Supel said it cost about $40 a ton for his maintenance crews to pick up blacktop at the plant in 2007, but this year that price is expected to range from $50 to $60 a ton.

Blacktop bid prices can vary widely. First they depend on whether the blacktop is picked up at the plant or placed by the paving contractor. Prices vary depending on the type and quantity purchased, how busy the contractors are at the time of the bid, the location of a project and other factors.

"I would say on average, prices are up 20 to 25 percent this year," Cooper said.

Washington Township manager David Anthony said his municipality would like to pave some gravel roads this summer, but not when that would cost about $80,000 a mile.

"Council will look at (bids) in the second week in June," he said. "I don’t foresee us doing any new paving, and if bids are too high, we might have to limit overlays as well."

Harborcreek Township Supervisor Joe Peck said his township has two major road reconstruction projects planned this summer. One is on Jordan Hill Road and the other is on Saltsman Road. Those projects are expected to eat up most of the paving budget.

"We are getting hit hard with prices for everything from diesel to the oil used for seal and chip surfaces," Peck said, adding even plastic sewer pipe prices are up 20 percent.

Erie officials said the city did fairly well in paving prices so far.

Streets Bureau Chief Pete Petrianni said bids for blacktop his crews will pick up came in at $51.75 to $54.95 a ton, depending on the type. In 2007, those prices were $48.75 to $52.50 a ton.

"I thought the increase would have been much more than it was," he said.

City Engineer Jon Tushak said the low bid opened Tuesday for the first of two contracts for city street milling and paving work.

The bid came in at $71.39 a ton for wearing-course blacktop, which is used for the top surface of the road, and $77.03 a ton for leveling course blacktop, which is used for the base of the road. In 2007, the price for wearing-course blacktop was $69.50 a ton. "It was only about $2 a ton more," Tushak said.

Meanwhile, communities that still have road projects to bid can only watch and wonder as prices rise.

"We are assuming the worst," said Meadville City Manager Joe Chriest.

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