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Cost of asphalt not falling with oil prices, says PCA

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World Cement,

The Portland Cement Association (PCA) has carried out an analysis of paving with asphalt, which shows that costs continue to rise despite falling oil prices. In fact, asphalt prices have reached record highs during the last 6 months.

Though oil prices fell 44% in 2H14, asphalt prices rose by 1.5% in that same period. PCA reports that a decline in asphalt prices has yet to materialise given six months of data since the beginning of the oil price decline, the normal lag period between the two commodities.

“During the last 10 years, asphalt prices rose 7% for every 10% 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 lifecycle 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. Instead, although PCA estimates that falling oil prices will lead to stronger economic activity and job creation in most states, departments of transportation will not see any price break. Analysis points to the increased use of cokers at oil refineries that reduce the amount of liquid asphalt from each barrel of oil and this decrease in supply occurring at the time when demand is increasing.

Adapted from press release by

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