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Price Hike Sparks MS Towns to Limit Summer Paving Jobs

Wed July 05, 2006 - Southeast Edition
CEG



TUPELO, MS (AP) Brace yourself for a few more potholes this summer, thanks to the soaring price of asphalt.

That black, gooey byproduct of crude oil — leftovers after refiners harvest precious gasoline, kerosene and diesel — sells at nearly $400 a ton. That’s more than double the $150 it fetched three years ago.

Higher prices for the raw material mean higher prices for mixed asphalt, the kind used on roads, parking lots and driveways. That price has jumped from roughly $25 a ton three years ago to roughly $45 today.

And according to Tone Garrett, executive director of the Mississippi Asphalt Pavement Association, prices likely will remain high for years. It’s all about the price of a barrel of oil, which has skyrocketed since terror attacks on the United States in 2001.

To cope, cities in Northeast Mississippi have followed a nationwide trend of slashing roads from their summer project lists.

Tupelo, Corinth, Oxford and Starkville are among the cities that either have scaled back their roadwork plans or anticipate doing so in part because of asphalt prices.

Corinth, which just spent the last of its streets budget this month, won’t fix another road until the next fiscal year starting in October, said Jim Bynum, city street commissioner.

“We just paved a two-lane road ... 20-ft.-wide for half mile, laying it 2-in.-thick, and it cost $37,000,” Bynum said. “I had an estimate on it two years ago, and it’s more than doubled since then.”

Tupelo uses approximately 17,000 tons of mixed asphalt annually. One-third is sold directly to the city, whose workers lay the mix themselves. The rest is laid directly by the contracted company.

Three years ago, Tupelo could get both amounts for $450,000. This year, the same quantity will cost approximately $802,000, said John Pittman, operations manager for city Public Works Department.

Pittman said he’ll ask for a bigger budget for the next fiscal year starting in October. Until then, he’ll have to drop streets from this summer’s overlay list. Some 20 streets await improvements, and Pittman estimates a handful will roll over to next year. He did not immediately know which ones.

Cities are not alone in feeling the crude oil price crunch. Some of Mississippi’s 47 asphalt companies say business is down due to slow city street work and other contracts upon which they normally rely.

“When your product goes up, people use less of it,” said APAC construction manager Keith Kelly. “We’ve lost about 20 percent of our business from it.”

Dennis Bonds, vice president of Bonds Paving, said government contracts haven’t declined much, but private sector sales have slowed as people either forego projects or turn to cheaper alternatives like concrete — which also has seen price increases in the past years because of international demand.

“Right now, the point we’re at, I haven’t seen it hurt our industry,” Bonds said. “But if it keeps going up, it will impact us in the private sector.”

Unfortunately for Bonds, few experts predict a reversal in the future. And Garrett offered these statistics as proof: No new U.S. oil refineries have been constructed in more than 36 years, and 24 U.S. refineries have closed since 1995. At the same time, asphalt consumption is predicted to rise about 1.3 percent until 2009.

The industry’s one saving grace is perhaps its reliance on recycled material. Between 15 and 30 percent of fresh asphalt mix contains discarded asphalt from old roads. That saves plants from having to use liquid asphalt, but it’s still not enough.

“Plants must meet strict environmental quality restrictions,” Garrett said. “When you put higher than 30 percent of recycled material in, it will flame and emit smoke. So, I’m looking at ways to add more recycled materials to the product to keep the price down.”