Asphalt shortage makes recovery rough
President-elect Obama wants to spend nearly $300 billion on infrastructure projects to create jobs and boost the ailing economy. But road and bridge repairs will require a lot of asphalt, and as Joel Rose reports, a shortage of it could spell trouble.
NuStar Energy plant (Coutesy of NuStar Energy)
TEXT OF STORY
Kai Ryssdal: If Congress gives him everything he's asking for, Barack Obama's going to wind up spending hundreds of billions of dollars on infrastructure. That could prop up the economy and create jobs in a hurry.
But building and repairing all those roads and bridges is going to require lots of asphalt -- the black, sticky stuff that holds together more than 90 percent of our roads. Trouble is, there may not be enough of it to go around as Joel Rose reports.
Joel Rose: I'm driving on Interstate 295 south of Trenton, N.J. This is an older concrete roadway. And as you can hear, it's starting to wear out in places. This road would be among the first to be repaved -- if New Jersey gets the money it's requested from a federal infrastructure spending bill.
Erin Phalon: We could begin awarding contracts for these as soon as we have funds to do that.
New Jersey Department of Transportation spokeswoman Erin Phalon says there are more than $300 million worth of "shovel-ready" paving projects in her state alone. Nationwide there are thousands of miles of road and bridgework just waiting for federal money. But all those projects depend on one extremely volatile commodity: asphalt. Last summer, the price nearly tripled in some places, which forced states all over the country to cancel paving projects. Since then, the price of asphalt has been falling almost as fast.
Ben Teplitz: The tail that wags the dog is the price of crude.
Ben Teplitz covers the asphalt industry for the trade publication Platts Oilgram. Asphalt is made from oil -- specifically the heavy stuff at the bottom of the barrel. Teplitz says refiners are typically more focused on making gasoline, because that's usually where the money is. Not right now.
Teplitz: The last time I checked, it did not pay to make gasoline, but it paid to make asphalt. The difference was over $13 a barrel.
So the last thing you'd expect is refiners to cut their asphalt production. But that seems to be exactly what many are doing. Before the price of oil collapsed, gasoline refiners started investing billions of dollars in new machines called cokers that can squeeze even more gas out of a barrel of crude.
Still, there's at least one company that's sticking with asphalt. Mike Pesce is vice president for refining at NuStar Energy. He's driving me around an asphalt refinery in Paulsboro, N.J., just across the river from Philadelphia.
Mike Pesce: For asphalt plant, this is the largest on-purpose plant in the United States. We have another refinery in Savannah, Ga. It's No. 2, or pretty close to No. 2 in size.
NuStar bought both of those refineries last year for upwards of $450 million. The Paulsboro plant alone pumps out more than 70,000 barrels of asphalt a day -- enough to supply much of the asphalt for eastern Pennsylvania, New Jersey and New York City. Standing in front of a jumble of pipes and smokestacks, Pesce is hoping this plant will soon be pushed to capacity.
Pesce The U.S. overall has a net shortage of around 20,000 barrels a day of asphalt. If these projects come in as we're seeing them come in, you're looking at a potential of extra demand in the United States of around 250,000 barrels a day.
And Pesce hopes that will keep asphalt refiners in the black for years to come.
In Philadelphia, I'm Joel Rose for Marketplace.
Comments
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From CA, 01/16/2009
I've seen news stories of the "perpetual pot holes" on the east coast. why don't they use the west coast practice of using lap cement on the edges prior and post patching so it doesn't lift out? isn't there a standardardized "best practices"?
From South Portland, ME, 01/11/2009
The are weaknesses of asphalt is very apparent. High permeability to water resulting in pothole growth due to icing. Localised frost-heave causing warping and bumps. Large chunks are often peeled off during snow-plowing. Requires patching and scraping after every snow storm. Susceptible to collapse due to localised soil movement despite presence of gravel underlay. Reinforced and Jointed Concrete Paving is more durable. Reinforced concrete works with the granularity of the gravel in the mixture to break the crack lines caused by icing. Frost-heave and soil movement effects would be dampened by the gravel underlayer and then dissipated across the whole concrete slab. Joints between slabs would also dissipate differentials between adjoined slabs. The hardness of cement concrete causes discomfort to rides and tyre-road noise. The solution is to have a top layer of asphalt, which dampens noise and bumpiness. The layer of asphalt also prolongs the life of the concrete layer. The thin asphalt layer that is susceptible to peeling would not create dangerous potholes and warping. The need for patching and scraping after each snow storm would be unnecessary. After each winter season, road damage is less than pure asphalt roads. Repair is not as severely surgical as required by pure asphalt paving. There would be only a one time patch-up of any asphalt peeled off after each winter or skipped every other year. In the long run, it is cheaper to have reinforced concrete substrate. Pure asphalt roads are short-sighted. New England, especially the state of Massachusetts, are ruled by short-sighted legislature as far as public highways are concerned. The Obama admin needs to finace infrastructure carefully to stipulate durability of roads.
From Flossmoor, IL, 01/07/2009
Asphalt pavement is not inferior to portland cement concrete. Quite the contrary. Asphalt roads are tough, quiet, rapidly built, and infinitely repairable. Pavement thicknesses are much less than concrete particularly when surface grinding is employed. And grindings or other removed asphalt pavement are highly recyclable being re-used in high percentages in new pavements. Once a concrete road begins to crack and fail it must be torn out and replaced or rubbilized in place for capping with an asphalt pavement layer.
From Flossmoor, IL, 01/07/2009
Asphalt pavement is not inferior to portland cement concrete. Quite the contrary. Asphalt roads are tough, quiet, rapidly built, and infinitely repairable. Pavement thicknesses are much less than concrete particularly when surface grinding is employed. And grindings or other removed asphalt pavement are highly recyclable being re-used in high percentages in new pavements. Once a concrete road begins to crack and fail it must be torn out and replaced or rubbilized in place for capping with an asphalt pavement layer.
From Kingman, KS, 01/07/2009
Asphalt is not necessarily the major ingredient of all highway and bridge construction as your story said. In fact, it is not used at all in new bridge construction. If you consult anyone outside the asphalt industry you will discover it is an inferior product to concrete. Cement, the essential indgredient in concrete, is not in short supply.
From CA, 01/06/2009
This story was an excellent opportunity to point out the untruths in both the democratic and republican claims about how we need to get off "foreign oil." While I think we all see the importance of renewable energy, unless we somehow replace all the other distillates of oil, not just gasoline, we will still need foreign oil. From asphalt to jet fuel to plastic, our economy depends on oil. I was disappointed that this story did not make that point more explicitly.
From St. George, SC, 01/06/2009
Mr. Rose made the comment,"But all those projects depend on one extremely volatile commodity: asphalt." This is not true. Roads can be constructed of concrete too. My husband works in the cement industry. His plant and others are stockpiled with bags of cement that cannot be moved because people have cut back on building. The price of gas being low may cause the price of cement in other countries to drop. Then people may import cement. This would hurt our domestic product. If some of the infrastructure were made with this domestic product it would help this country in more ways than one.
From North Canton, OH, 01/06/2009
Everyone thinks that the infrastructure rebuilding program will have an immediate effect on the economy but I feel it will be minimal. The real effect from rebuilding our infrastructure will not be felt for a year or two. A public works project such as rebuilding a bridge, or constructing new highways takes a minimum of a year to two or three years from inception to being built. The state governments almost without exception say they have projects ready to be built within months. I spent 27 years working for a muncipal engineer's office and I know that those projects are most likely projects that the states already have in their pipeline and they would merely switch out the funding of these projects to federal funds, thereby benefitting the state governments more than the general population.
From Kennewick, WA, 01/06/2009
Rose's asphalt story was excellent! there should be more stories about the other parts of oil refining and production and their effect on the economy - pro and con (plastics, etc.)
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