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Asphalt contractors concerned about oil prices, city's budget

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Asphalt contractors are holding their breath. Although there appears to be plenty of roadwork ahead because of the wet winter, rising oil prices and the city of San Diego's serious budget problems have darkened the immediate future.

Joe Croney, manager of G. Scott Asphalt in Chula Vista, said depending on the amount desired, the price for 3/4-inch asphalt climbed from $27.75 a ton in May of last year to $31 today. While that might not sound like a lot, Croney said it all adds up. What's more, the word on the street is that the price is going up by at least a dollar this summer.

"Look at it this way. If it costs $60 instead of $50 to fill up your tank, you start to feel it," Croney said.

Croney said another problem is a company out of Corona known as Chandler LW Aggregate has stopped producing fine crushed granite for slurry seal, forcing his and other firms to look for the product in other parts of Southern California.

Meanwhile, with many roads damaged in the recent rains, Croney said there should be plenty of work for some time to come. But with the city in a fiscal crisis, roads won't be fixed unless they must.

Jack Guenther, a senior sales representative with Vulcan Materials Co., said he also is concerned about how the city's fiscal woes might affect his industry, but for now is content to wait and see how it will all play out.

Vulcan has an asphalt plant in Mission Valley and Carroll Canyon, but the Mission Valley plant probably won't last longer than eight years because the land is slated for development.

While Croney said he likes city jobs, he said it typically takes the city 60 days to pay, while he operates on a 30-day pay schedule. "Our policy is we pay on time," he said.

G. Scott Asphalt is a non-union shop, but the firm must pay prevailing wages on city jobs. For a typical asphalt laborer, Croney said the non-union wage is $12 to $16 per hour versus $32.82 for a prevailing wage laborer. The equipment operators, meanwhile, start at about $46.19 per hour.

Guenther said he believes the asphalt business is strong, but that oil prices have spiked by about $4 per ton over the past year by his assessment, depending on the mix. "I think they (OPEC) are thinking about another increase," he said. "I hope they get this under control."

Guenther said the hike in asphalt prices comes at a particularly difficult time for his industry because concrete prices have been soaring significantly more than that.

The good news for asphalt contractors, he said, is that all the rain has made for lots of work. Guenther said this increased activity should offset any hikes in oil prices, at least for now.

While asphalt contractors wonder what the oil prices may be a year from now and how they might be impacted by the city of San Diego's financial crisis, changes have been happening in pavement technology as well as what goes beneath.

The city of Carlsbad, for example, has been employing polymer technology -- in this case, melted tires -- to both get rid of old tires and increase the durability of the road. The Kentucky-based Asphalt Institute says that preliminary studies have shown that the addition of rubber does make a significant difference.

"Comparative modified and unmodified sections at 84 controlled experimental sites across the U.S. and Canada were evaluated for rutting, fatigue cracking and transverse cracking," the institute writes. "The report confirms a significant increase in pavement life, rutting resistance and prevention of thermal cracking associated with the application of PMA as compared to conventional hot mix asphalt."

A styrene compound without the rubber was also shown to have significant benefits.

Under California law, pavement contractors only have to ensure their jobs for a year. Until a better way is shown to him, Croney said the law should remain for the foreseeable future.

"We wouldn't want it to be more," Croney said. "You don't know what can happen to a street. You can have trash trucks, buses, whatever. You have to remember that asphalt is a fluid."

A decent roadbed is as important as the actual asphalt. A method pioneered in Texas combines a diluted sulphuric acid compound and lignant sulphate. The liquid sprayed onto the roadbed is supposed to result in a significantly stronger bed for the asphalt.

David Smith of Lawndale, Texas-based Friends for Friends Construction has been promoting the product in which he offers a seven-year guarantee, but as yet (despite a recent demonstration in Otay Mesa) has been unable to convince the city of San Diego to consider the product.

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