Liquid Asphalt Prices Force Difficult Decision in Maine

Fri September 26, 2008 - Northeast Edition
CEG



The rising price of liquid asphalt is forcing MaineDOT to suspend paving projects that were scheduled to begin later this year.

The price of liquid asphalt, the primary component of paving materials, has more than doubled since January. Liquid asphalt sold for $307.50 per ton in January, but it cost $765 per ton as of Aug. 4, and the price is expected to continue to rise. In July alone, one of the busiest months for paving in Maine, the price of liquid asphalt rose by 39 percent.

Over the course of a year, the department uses more than 57,000 tons (51,710 t) of liquid asphalt. The escalating cost of asphalt has led to a similar increase in the cost of paving projects already under way or recently completed by MaineDOT statewide. Due to the higher cost of these projects, MaineDOT is unable to afford paving projects that were scheduled to go out to bid later this month.

“The extraordinary inflation of liquid asphalt has left us little choice but to suspend future paving projects,” said David Cole, MaineDOT commissioner. “We can not afford to continue with paving projects that are scheduled for later this year, nor would it be a wise use of funds to do so.”

The difficult but financially necessary decision ends MaineDOT’s advertising for new paving projects earlier than planned. The department has stopped awarding paving contracts, and will not advertise asphalt-intensive projects for the remainder of the year. All signed paving contracts will be honored.

It is important to note that future projects have been suspended, not cancelled. Depending upon state and federal funding levels, MaineDOT hopes to advertise these suspended projects next spring. Asphalt prices typically decline during late fall and winter months.

“We will be monitoring the market, and when liquid asphalt prices stabilize and the funding picture becomes clearer, probably next spring, we intend to advertise these projects again,” said Cole. “It is similar to a homeowner deciding whether to lock-in on heating oil prices. The prudent decision is to wait when prices are at historic highs and to monitor prices since they will likely go down in the future. Of course, there are no guarantees, but we believe this is the best decision given fiscal and market trends.”

MaineDOT originally planned to pave approximately 825 mi. of road this year at an anticipated cost of $105 million. Due to asphalt price increases, MaineDOT has or will spend about $107 million, but will get only 740 mi. of road paved. This means the average cost per mile of paving has increased about $20,000 — or 15 percent — in just a few months. The decision to stop now means about 85 mi. of road, with an estimated cost of about $13.6 million, will not be paved this year.