Do you know what influences the cost of asphalt for your project? While several factors contribute to project costs, one of the most important to consider is oil. As oil prices rise, so do the costs of asphalt, but why?
The price of crude oil impacts far more than the fuel cost of driving from point A to point B. Keep reading to learn more about how oil prices connect to your paving projects below and how to minimize the potential impact. Then contact our paving company to get your project started!
The Connection Between Crude Oil and Asphalt
Asphalt is one of the many by-products of the refining process for crude oil. As a byproduct, the cost isn’t quite as high as the refined items that are the focus of the oil industry. Over time, the prices of crude oil and asphalt continue increasing in nearly matching increments with a .03% difference.
However, crude oil and refined fuel prices play a critical factor in the cost of transportation of your project materials. If your materials are coming from a distant location, the cost of transporting your material will likely increase considerably.
How Does the Price of Oil Affect Asphalt Costs?
Historically, we can see that an increase in oil prices often leads to higher asphalt costs. However, several factors contribute to this, including the following.
Environmental Concerns
Many oil-related products are falling out of favor for more environmentally friendly materials as environmental concerns become more evident across the globe. Some companies are leaving the oil industry due to the pressures and expenses of meeting new government regulations, which in turn drives down availability and increases the overall price.
Geopolitical Circumstances
Strains between nations across the globe can significantly impact the availability and cost of oil, asphalt, and other necessary project materials. In recent years, some of the most significant stressors include, but aren’t limited to, political strife in Venezuela and the COVID-19 pandemic.
These circumstances factor into the availability of the material and the workers necessary to install the material.
Transportation Costs
One of the most obvious results of higher oil prices is higher gas prices. Increased gas prices mean it becomes significantly more expensive to transport materials for asphalt paving and other construction materials.
Profit Potential
As costs for oil continue rising, companies are looking for more ways to maintain or achieve greater profits. Unlike asphalt, gasoline has a higher profit margin, so more companies want to invest in gasoline rather than asphalt. Although asphalt is still widely available, the reduced production makes it scarcer, thus increasing how much it costs.
How We Can Help
Whether you are planning paving a new parking lot or trying to preserve it by sealcoating your parking lot, you should know where to turn for professional installation. Victory Paving offers reliable services for all of your paving needs.
When planning your paving or seal coating project, ask for a little wiggle room in your estimate to allow for potential cost fluctuations between the estimate and the project start. The changes in price will impact the initial installation as well as future maintenance projects.
The cost of asphalt has many influences that will change over time. Call your San Bernardino paving company by calling 760-367-8043 to receive a free estimate and learn more!