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Associations Spar on Asphalt Prices

Despite falling oil prices, the cost of paving with asphalt continues to rise across the U.S., according to a recent analysis from the Portland Cement Association (PCA). PCA stated that asphalt prices have reached record highs during the last six months.

T. Carter Ross, spokesman for the National Asphalt Pavement Association (NAPA) countered, "Back in 2011, PCA was predicting we’d be at $120 per barrel for oil by now, but that’s clearly not the case. This latest statement is designed to improve the market position of portland cement, not provide an accurate view of the relationship between oil prices and the cost of asphalt pavements."

PCA said that oil prices declined 44 percent in the second half of 2014, and during the same period asphalt prices increased 1.5 percent. A decline in asphalt prices has yet to materialize given six months of data since the beginning of the oil price decline, the normal lag period between the two commodities.

Historically, rising oil prices have been highly linked with rising asphalt prices. “During the last 10 years, asphalt prices rose seven percent for every 10 percent increase in oil prices,” said Edward J. Sullivan, chief economist and group vice-president at PCA. “In contrast, concrete prices have not increased anywhere near that pace. As a result, concrete paved roads held both an initial and life-cycle cost advantage when compared to many types of roadways.”

Given the depressed level of oil prices, asphalt roads should have regained their competitive advantage over concrete in both initial costs and life-cycle costs, PCA stated. Instead, although falling oil prices may lead to stronger economic activity and job creation in most states, departments of transportation will not see any price break.

"It’s too early to predict what liquid asphalt prices will do in relation to falling oil prices; however, falling diesel fuel prices are likely to help reduce operating costs if they hold into the 2015 paving season," Ross said.

"Public agencies continue to rely on asphalt pavements because they understand that asphalt surfaces are the most cost-effective way to ensure a high level of drivability and performance for the traveling public," said Ross. "Asphalt pavements are easier to maintain and repair than concrete pavements with fewer delays for drivers, and asphalt pavements tend to be smoother and quieter than concrete."

According to NAPA, the asphalt pavement industry also continues to look for ways to improve the sustainability of its products. For example, many asphalt plants have converted to natural gas to further cost savings. "We also have been working to increase the reuse of asphalt cement from reclaimed asphalt pavements and recycled asphalt roofing shingles," Ross said. "These efforts have both environmental and costs benefits."

According to a recent NAPA survey, 73.5 million tons of reclaimed asphalt pavement (RAP) and 1.7 million tons of reclaimed asphalt shingles (RAS) were used in new asphalt pavement mixes in the United States during in 2013. Reclaiming and reusing the asphalt cement in RAP and RAS saved about $2 billion in 2013 compared to the use of virgin materials.