With the price of fuel, asphalt, and steel inflating regularly, it appears the construction industry is slowly collapsing. The materials that act as the corner stones of the industry, including items consumed by contractors, surged an average of 10.4 per cent in cost this year. The increase in price for highway and street construction rose a record breaking 18.9 per cent, causing many to fear that some states may stop awarding contracts.
While reviewing the June producer price index (PPI) released by the Bureau of Labour Statistics (BLS), Ken Simson, chief economist for the Arlington, VA.-based Associated General Contractors of America (AGC), explained his concern. “Bad as those figures sound, the increases in asphalt and steel costs have been even worse since these prices were collected in mid-June,” Simson said. “In the first two weeks of July, asphalt prices have jumped by 40 per cent in several parts of the country.”
The U.S. Energy Information Administration recently reported that the average price of highway diesel hit a new record of $4.76 per gallon, an increase of 12 cents in the last two weeks.
If the rising price of fuel, asphalt and steel wasn’t enough to cripple the industry, suppliers are warning of an increase in price for gypsum, aluminum, and natural gas, a key ingredient in many plastics.