Leader Blues

Wednesday, September 13, 2006

TOP STORY >>Asphalt cost slows road work

By PAUL PETERSON
Leader staff writer

For the last five years, the price-per-ton of asphalt has remained stable. Since asphalt, which is petroleum-based, began skyrocketing in March, public-works departments have faced the daunting task of deciding their road-maintenance schedules, repairing heavy damage first, as well as exploring options to stretch operating budgets.

Glen Bolick, a spokesman for the Arkansas Highway and Transportation Department, said municipal and county governments must set priorities on which roads to repair and pave. “Sure, obviously the rising price is going to affect any project of this type,” he said. “Cities and counties are going to have a harder time than we are. It’s a little hard to explain, but the best analogy I can offer is to think of having to mow your grass year round, regardless of the price of gas. In some areas, you may mow them out of turn. It’s the same way with street maintenance. The worst problems are going to get fixed first, whether asphalt price is high or not, just like gasoline.”

Bolick emphasized that contractors are most likely to feel the strongest pinch, as bidding processes can be extensive for long-term projects, and asphalt prices may increase after a bid is secured. “With tonnage prices, who gets affected more than anybody is going to be the contractor,“ Bolick said. “Say, for instance, he comes into bid us on a half-million dollar job. It takes 30 days to bid and maybe between 45 and 60 days to get on the job. If prices go up again, he’s locked into it. It’s still a half-million dollar bid. That’s the nature of the bidding process.”

Bolick explained how the highway department is adjusting to high cost of asphalt. “We’re splitting some jobs,” he said. “Instead of a million-dollar, 10-mile overlay, we’ll do a half-million, 10-mile project so contractors can bid a job that won’t take three or four years. The market dictates.”As for a dismal or promising future, Bolick is uncertain. “Ask a city or county judge,” he said. “A city mayor or local contractor will probably bear most of the brunt of this increase. Prices are going up, bids are higher on jobs, so it made sense for us to make for smaller jobs for contractors to bid. It benefits them, us and the entire state.”

Some city and county governments haven’t felt the pressures of rising asphalt costs because of current contracts with locked prices. But in all likelihood, they will, once contracts expire.

Barbara Richard, director of the roads and bridges department with Pulaski County Public Works, said, “We have been operating for the last three years under a contract with locked prices. We get asphalt ourselves by going over in a truck to get materials and do job ourselves or we can have the contractors apply it for us.”

“But we will have to re-bid in August,” Richard said. “From all indications, we’re looking at a 30 percent increase. When that happens, we’ll definitely start feeling it, because asphalt is an oil-based product. I think everybody’s going to have to take a good hard look before spending dollars. There is preventative maintenance to consider, such as applying seal coats to buy more time before resurfacing asphalt. Counties may have to cut another line item for extra money to fund road repair. As for Pulaski County, it’s the judge’s priority to keep roads up. We only have so much budgeted each year for every type of county project, but I can tell you it’s a big priority with our county judge,” Richard said. “He won’t let them suffer. We’re proud of roads in Pulaski County. We’ve got a good road system and intend to keep it that way.”

Jim Oakley, public works director for the City of Jacksonville, said his department paid about $42 a ton. “We’re fixing to go over the budget for our 2006 overlay program,” he said. “We may have to cut about 30 percent. Right now, we’ve got approximately $250,000 a year for overlays, at $30 to $40 per ton of asphalt.

“We only bid overlays once year, and it was $42 a ton in June 2005. Now, a local contractor could be paying around $60. That’s an estimate for June 2006. We’ll know in about two or three weeks the 2006 prices. For linear feet, a ton of asphalt will do approximately 10 square yards of roadway, but it depends on how wide the street is. The cost per ton is cutting back on how much you can do, but we’ve budgeted the same amount. I guess we’ll do a few less overlays than normal.

Jacksonville is fortunate enough to budget an overlay program. We’re in good shape for the most part, but if the price keeps going up, it could be hard to catch up with our workload, and we’d have to look at coming up with more money.” A hefty reserve supply of materials, however, does have its advantages. Lonoke Public Works director Tony Scroggins said, “As far as road maintenance, we’re in good shape because we pretty much stocked up on prepackaged coal mix that we already bought. There’s not any maintenance to do right now. “Sure it’s going to have an affect on asphalt bidding price per ton. If it’s tripled, we’ll have to decide whether or not to make repairs. Typically, it costs around $4,000 a city block. We may cut down in overlays instead and I’m sure it will have an affect as far as any new overlay projects are concerned. Another Lonoke Public Works employee said, “ Depending on the amount of dollars, if asphalt goes up, streets get shorter.”

Tracey Perkins, with the roads and bridges department of Pulaski County Public Works, said, “The current price per ton is $43.07 in-place, and when our truck picks it up, the price is $32.65.” Perkins said “in-place” is the term applied when contractors apply the asphalt surfacing.

John Suskie, executive director of Arkansas Asphalt Pavement Association, said, “As far as local cities and counties, we have producers and what we call lay-down contractors. Right now it appears prices are based on a national average, but it depends on where you are and how far you have to haul it. In recent years industry experts have been saying that with no increase in actual revenue, that basically, the same dollars available will only be able to purchase 20 percent less than what they could have before the price increase.”

Suskie explained that regardless of the type of paving project, costs won’t stretch as far as they once did, and that any business or municipality involved with road surfacing and repair will endure the resulting frustrations of higher asphalt prices. “Whether it’s city or rural, heavy or light overlay, a two-inch repaving or 8 to 10 inches, you can bet that fewer cities will be able to pay as a result of this,” he said. “That’s what contractors are wresting with right now. It’s a real gamble our guys take, and they may have to bid a little higher right now just to cover their own expenses. One approach the highway department has taken, and it’s real admirable, has helped, though. What they might do is to bid road work, bridges or widening shoulders, or ‘dirt work’ as it’s called, and delay bidding on paving itself, where they’d usually bid it all out at once.”

Suskie said that prioritizing paving projects is key. “As for long-term, we’re looking at having to make hard decisions,” he said. This has caused some contractors not to bid jobs at all, some as far out as 18 months.” But this cause-and-effect relationship with operating expenses also occurs in other business sectors.

“It goes back to the entrepreneurial spirit,” Suskie said. “This happens to homebuilders, too. If the cost of material goes up, consequently, they feel it too. But I’m proud to say I never hear any comments from any of our associates about cutting the quality of work, just maybe the quantity. The public really needs to understand what we’re going through, especially with probing out long-term projects. Some aren’t conscious of the process of contracting. It’s kind of a frustrating thing. Of our 120 members, 40 are asphalt producers.”

Even though the price hike is drastic, Suskie said it came forewarned. “It’s really been coming strong since last summer; without any question Katrina had an affect,” he said. “The costs of diesel was more of a concern last year than the price of asphalt. The drier to heat aggregate runs on it; some use natural gas. Also, it depends of how far you have to haul it, which is usually between 30 and 50 miles. Imagine the fuel costs to move heavy tonnage. We had meetings with haulers, local dump truck operators and aggregate haulers. They bid too, for hauling routes, and if they don’t get enough to cover mileage, it’s not worth it.”

Cabot Public Works director Jim Towe said the city hasn’t funded any overlays this year. “From my standpoint we don’t need to, as of yet,” he said. “We’re still working out of Greystone.

Ward Mayor Art Brooke said, “We’ll just have do to a little less work than we normally would do. In smaller areas like ours, we don’t have the tax base other cities have. Also, asphalt costs will have adverse affect on the 19 streets we’ve scheduled for repair maintenance. The seven we’ve looked at for this year will probably be all we can do.”

Brooke said his city has considered other options. “We’ve looked at chip and seal,” he said. “It’s an alternative to asphalt. The county does a lot with it and the state does a lot of renovation resurfacing by using a sticker base and putting loose shad on top and rolling it. At one-third the cost, it’s still not near as durable and long-term as asphalt.“

Austin Mayor Bernie Chamberlain anticipates asphalt prices will affect her town as well, even though water line improvement is current priority. “Oh, it will,” she said. “We’re upgrading water lines that are old and have been here since the 1960s, so we’ll hold off on roads. Once the lines are in, we’ll need to do a lot of asphalting. But we may have to do it only a little at a time.”

McRae Mayor Bob Sullivan said his city isn’t currently undergoing any roadwork. “The rising cost of asphalt is affecting everything,” he said. “It’s going to limit our repairs this summer. With high costs, we’ll just do what we can with the worst streets and next year do the rest. We’ve seen it coming, but didn’t realize it was going to be so drastic, on account of fuel prices. Fuel prices are killing everything in America.”