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Asphalt Prices. Forecasting the 2010 season.
Summer of 2008… People associated with the asphalt industry know this time period very well. It was when the prices of asphalt rose unpredictably. In two months pricing went up a staggering 70%, causing major grief for the industry and its patrons.
By: Richard Dinkela II
Why are prices so high in the midst of recession and the “down” season? Several explanations have been given by one oil producer located in Wood River, Illinois (small town north of St. Louis): Since the American economy is in recession and inflation is up, sales of goods are down and people are spending less money. Because people are doing less and buying less, less fuel is being consumed. Since less fuel is being produced, less asphalt is being made as result. Therefore they have less liquid asphalt to sell. This has all happened over the course of this winter. Another speculation for the subsequent rise in liquid asphalt is major resellers of liquid asphalt have purchased large quantities this winter; leaving the supply low. They do this to try and maximize profits in the spring, in case of a price spike. I asked about decreasing the production amounts of fuel to help balance out the overall petroleum market. The representative for the oil producer did not have any information on if that in fact would be implemented, but he did agree that it would stabilize the situation. The information available on the determining force behind the refining process is limited. Another possible scenario as to why big oil companies charge so much for liquid asphalt is because of the focus on infrastructure today. Much of President Obama’s plan for stimulating the economy is dedicated to improving roads and highways. So instead of making money from the motorists, they will get it right from the government through the sale of asphalt material. Again, this is speculation, but it’s not farfetched.
Unfortunately, this year will probably be much like 2008; volatile and inconsistent. Unless the big oil companies start being more fair and ethical in how they price fuel and other petroleum products, more negative effects will be prevalent in the private sector and for the overall economy.
Regardless of how the prices fluctuate, projects utilizing asphalt pavements and roofing materials will always need to be completed. Simply “waiting” for the market to stabilize is not a realistic stance to take. Even during a recession it might be best to try to get asphalt projects done sooner rather than later. In 2008 we were headed for a recession. The best analysts couldn’t predict what would happen then. In 2009, prices receded slightly, but remained overall consistent. As of right now the price of liquid asphalt is just a couple of dollars less than where they peaked in 2008.
If you have a project planned for 2010 that involves using asphalt related materials, please keep a few tips in mind. Paving contractors, roofing contractors, etc have no control of material prices. Since 2008 prices are given on a monthly basis. There is no ability to lock in your price. When your project takes place will determine how much you pay for material. Try to complete your project in the spring time. Most contractors start the season slow, and progressively get booked as the season gets close to the end of the year. If your project is residential, try to get a neighbor to have work done as well to take advantage of a multi-discount. If you are constructing an asphalt surface such as road, parking lot, or driveway, keep your design simple and focus on the foundation of the surface. Rock is relatively inexpensive and can help improve the overall strength of a paved surface. Doing this may enable you to use less asphalt depending on the scenario. If you are selling a property, try to emphasize esthetics over functionality. You may be able to perform simple maintenance rather than replacement to enhance appearances. When choosing a contractor, be sure to do your homework before making a decision. Check for any information about them on the internet. Look to see if they have a website which enables you to actually look at the type workmanship they are capable of. Actually check with any references they give you. You should do this regardless of the state of the economy, but today it is increasingly important.
Creve Coeur Paving:
A Saint Louis based, family owned paving company focused on utilizing the most advanced methods of servicing its clients. Motivated by the company’s highly regarded work ethic, its owners and employees have been striving for perfection for over thirty five years. “Our Passion, Your Pavement.”
Richard Dinkela II, Operations
Creve Coeur Paving
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Asphalt paving contractor located in Saint Louis Mo. Specializing in anything asphalt related. Commercial and residential paving contractor for over 35 years.