Pike Industries, Inc.
Lakes Region Transportation Workshop
11/15/13
Global Factors Affecting Highway
Construction Cost
• The rate of global economic growth (especially
developing countries) is a major driver of
energy and materials demand
• Volatility in crude oil prices
• Fuel oil demand and conversion to lighter
crudes reducing asphalt supply and increasing
asphalt prices
• European refinery closures will increasingly
put demands on U.S. supply
At the Refinery
U.S. Asphalt and Road Oil Stocks at
Refineries
(Ergon Asphalt & Emulsions, Inc.)
PII Liquid Cost % of TVC
60.00%
50.00%
40.00%
30.00%
Liquid AC % VC
All Other VC %
20.00%
10.00%
0.00%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Managing Pavement Cost
• 1993 EPA and Federal Highway Administration
identify asphalt pavement as America's No. 1
recycled product
• A wide range of waste materials are now
incorporated into asphalt pavements,
– including ground tire rubber, glass, foundry sand, slag,
pig manure
– the most widely recycled are reclaimed asphalt
pavement (RAP) and recycled asphalt shingles (RAS).
• The use of recycled materials in asphalt
pavements saves hundreds of millions of cubic
yards of landfill space each year
Recycled Asphalt Pavement (RAP)
& Recycled Asphalt Shingles (RAS)
• RAP and RAS displaces virgin materials
(aggregates and liquid asphalt)
• In 2011 RAP usage reached 66.7 million tons
– 7% increase from 2010 and a 19% increase from 2009
– NHDOT allows 20% RAP
• RAS usage increased to 1.2 million tons in 2011
– 8% increase over 2010, and a 52.5% increase from
2009.
– NHDOT studying the use of RAS
Warm Mix
• Requires less energy to produce at lower
temperatures
• In 2011, total WMA tonnage in the U.S. was
estimated at about 69 million tons,
– 67 % increase from 2010
– 309 % increase since 2009
• 2011 NHDOT reported WMA use at 30%
Other Cost Reduction Strategies
• Heating fuel to dry aggregates
– Specification used oil, natural gas, well draining
stockpiles to reduce moisture in aggregates
• Electricity for plant operations
– Energy conservation, timing opening & closing
dates
• Fuel for mobile equipment & trucking
– Limit idling, bio-diesel, fleet monitoring software
systems
Revenues
• USFHWA and NHDOT operating under 20 year
old funding rates (motor fuel user fees)
• US Fleet increasing mpg + decreasing driving
habits = decreasing revenues (9M gallons per
year less gasoline consumed than 5 years ago)
NE State & Local Motor Fuel Revenue
(000’s)
(http://www.gaspricewatch.com/imgs/popup.html?motor_fuel_rev.gif)
800,000
700,000
600,000
500,000
CT
ME
MA
400,000
NH
RI
300,000
VT
200,000
100,000
0
1977
1982
1987
1992
1997
2002
2004
2005
2006
2007
2008
2009
(Transportation for America)
MAP-21 Expires Sept 2014
The Effect of Increased Fuel Economy
$160.00
$140.00
$120.00
$100.00
$80.00
Tax Rate
Annual Tax
$60.00
$40.00
$20.00
$0.00
The Challenge for the Road
Construction Industry
• Lack of predictability for future maintenance
and construction programs hinders
reinvestment in the business
• Employee retention as workers seek more
secure/predictable occupations
• Thousands of NH families rely on this industry
to make a living
• Every NH family relies on this industry for safe
and efficient transportation
The Challenge for NH
1. NH has 2,129 bridges and 4,300 miles of roads.
2. Average pavement lifecycle in NH is between 8-12 years.
3. Must repave 500 miles of road per year to stay even but under current
revenues are paving approx 300 miles annually.
4. Each $1 spent on road maintenance eliminates spending $6-14 on roadway
rebuilding.
5. 83.2% of NH residents travel to work on the highways with ave commute
time 25 minutes
6. Rough roads add $335/yr in vehicle repairs on average
7. Modest improvements in pavement smoothness could save up to 3.7 billion
gallons of gasoline and 1.3 billion gallons of diesel for the U.S. annually.
Smoothing America’s roads and highways could save $12.5 billion a year for
the U.S. economy. (Auburn University 2011)
8. Increasing cost + decreasing revenues + political gridlock = a system in
decline that will cost many times more to repair in the future