Gear up for rocky roads

Marketplace Staff Aug 15, 2006

KAI RYSSDAL: BP’s almost back up to half speed at its big oil field in Prudhoe Bay, Alaska. The company said today it hopes to be pumping 200,000 barrels a day before too long. Initial reports were we’d lose 400,000 barrels as the field shut down for maintenance. So oil prices are easing just a bit. About $73 at the close today in New York.

But even that is making summer travel more expensive. It’s driving up the cost of the road itself, too. High asphalt prices have some towns cutting back on the amount of road construction they plan to do this year. And that could mean a bumpy ride for US drivers. From WHYY Joel Rose reports:

JOEL ROSE: Asphalt is a mixture of stone and a binder that’s made from petroleum. So when the cost of oil goes up, the price of asphalt goes up too.

ARTHUR LISTON: We’ve seen a 40 percent increase in asphalt over the last year. And just 25 percent over the last six months. That’s insane, in a sense.

Arthur Liston is the manager of Mount Holly Township in southern New Jersey.

LISTON: When you see a 40 or 50 percent increase of something over a year, it has a substantial impact on what you’ve projected for your capital projects. Since we’ve only got so many dollars in this existing budget, we’re gonna have to cut back on roadways to do.

Liston says he’ll have to cut roughly 10 percent of the town’s planned road maintenance this year. Other municipalities say they’ve set aside enough money to cover summer construction projects — at least, for now.

[construction sound]

Guys in hard hats and fluorescent shirts are breaking up the surface of an otherwise quiet side street in Upper Dublin, Pennsylvania. Bernard Brown is driving the backhoe.

BERNARD BROWN: We’re removing the existing blacktop in front of the new curbing, and lowering it so water can drain into the inlets correctly. We’ll put down the new blacktop once we get this all cleaned out.

Township Manager Charles Oyler says he locked in a price for asphalt months ago.

CHARLES OYLER: We were fortunate. We bid for our blacktop early in the spring. Communities who have waited until later in the spring or early summer to bid are seeing the result of the inflated price of oil. And they’re getting much higher bid prices.

One manufacturer says the cost of the petroleum-based binder used to make blacktop has doubled since last year. And Charles Oyler thinks the price of blacktop will go even higher.

OYLER: Next year will be another story. We will have to factor in an additional increase in blacktop prices. And it will probably mean we’ll do less roads than we wanted to do.

For drivers, that means potholes won’t get filled. And for cities, that means an even bigger price tag down the road, says Mount Holly Manager Arthur Liston.

LISTON: You’re just putting it off to another time to get it done. A lot of times, there’s a long-term cost factor there because your costs are gonna increase because you have the infrastructure that’s decaying at a higher level than if you did it now.

Liston says the town will either have to scale back the amount of roadwork it does next year — or raise taxes to pay for it.

In Philadelphia, I’m Joel Rose for Marketplace.

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