January 9, 2009
Asphalt prices got you down? During the middle of the 2008 season, asphalt prices jumped to unexpected levels. Why is this happening? Well it's directly tied to crude oil. You may think that since fuel prices are lower now than they were in 2007 asphalt prices should follow that trend. Unfortunately this is not the case. We'll inform you on how asphalt is produced and how you should plan for your next pavement project.
Asphalt prices have taken a minor drop, but haven't even returned to the original prices we started with at the beginning of 2008. What we currently have as of the New Year is a surplus of liquid asphalt that plants have already purchased at a high price to make hot mix. Also with reformulation of some fuels, there is less asphalt left from the distillation process. This makes it hard to predict what the prices will do.
Where does asphalt come from, and how is it related to gasoline? When oil producers refine crude they are left with different types of petroleum products ranging from fuels to lubricants. After fractional distillation, residual oils are left over. In simple terms, that oil is asphalt. The surface you see on your roads, parking lots, and driveways is not actually asphalt alone. Rather it is the mixture of asphalt and different varieties of stones and aggregates. Asphalt is the glue or cement that holds the mix together. This mixture is what composes blacktop or pavement.
Keep in mind that there are other scenarios that have been impacting the price of oil, which trickles down to the price of asphalt. Natural disasters, storms, conflict in the Middle East, and war all negatively affect oil production.
Now that you understand how asphalt is produced and how the price is influenced by multiple variables, you are better armed in planning your project. So what can you do keep from spending too much? As of August 1st 2008 asphalt increased by over 70% for the 2008 season. With the global instability we are currently facing, there is no way of predicting what will happen in 2009. The speculation is that asphalt may drop a slight amount from where it is now during the spring, and then steadily rise throughout the summer. There are several options to consider when choosing asphalt:
- Spring time usually is the slowest season for paving contractors. If you have the need to pave something with asphalt, try to do it this spring, or early summer. If you have a commercial project that won't be ready to pave until later in 2009, ask your contractor if it’s possible to pave an initial layer of your new parking lot or road. Doing this will give you a paved surface to use until the building is complete. Once you’re ready for the final surface of asphalt you will have less material to install. This could save you money if prices surge before you finish your project.
- Is the thickness of asphalt outlined in your design too much? - In many cases you can get by with a thinner surface depending on what the pavement is subjected to. How long will you own the property? - You don’t want to invest too much into something you may be selling soon.
- Ask about cash discounts, or bulk discounts. - If you have several properties, or neighbors that may be interested in paving their asphalt driveway, you can realize savings because of reductions in labor or mobilization costs. Putting multiple jobs together saves the paving contractor time. If you have a smaller job, most contractors will give discounts for being paid in cash.
- Keep your design simple. - Jobs with complex additions or multiple hurdles will undoubtedly raise the price of your job. Be sure that your rock base exceeds standards for what your pavement will be subjected to. Rock is the foundation your asphalt driveway, road, or parking lot is built on. Rock is also much cheaper than asphalt and should be used as liberally as possible to prevent defects in the pavement surface. In St. Louis most problems related to pavement defects are because of a poorly designed base. Using an adequate amount of rock will save you money in the long run no matter what asphalt prices are.
- Are your bids from different companies priced alike? - Ask for the allotment of material or the current price of asphalt. This will keep your bidders honest when they quote the given thickness or area.
- Maintain over replace? - Be careful here. In most cases if you can stand to go one or two more years before paving you shouldn’t waste money on sealcoating. What you spend on sealing is just taking money away from your paving budget. Patching is a good alternative to replacing an entire surface.
Unfortunately when asphalt prices go up the consumer is usually the one to absorb the increase. Today’s profit margins are tighter than ever for contractors. Higher insurance, fuel, and material costs have a negative impact on bottom line. So it’s best to take the advice from the above list to make sure you get the best product for your money. Be sure to do your homework when selecting a contractor for any type of improvement on your property. Make sure the firm you’re dealing with is reputable, local, accredited, has insurance, and puts everything in writing for you to review.
Creve Coeur Paving:
A St. Louis based; family owned paving company focused on delivering the best possible solutions for its clients. Motivated by the company's highly regarded work ethic, it's owners and employees have been striving for perfection in paving for over thirty years. "Our Reputation Rides On Our Service."
Richard Dinkela II, Operations
Creve Coeur Paving