Paving the Way: The Cost of Paving

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(Host) Significantly higher oil prices are having a dramatic impact on the cost of highway paving projects in Vermont. As a result, some planned road repairs will have to be postponed.

The higher costs are also expected to consume most of the increase in next year’s $40 million paving budget.

In the first of a three-part series, VPR’s Steve Zind looks at the struggle to make ends meet on Vermont’s highways.

(Zind) Nearly every step in the paving process relies on petroleum products. But the biggest impact of high oil prices is being felt at hot mix plants like the Pike Industries facility in New Haven. Liquid petroleum is a key asphalt ingredient. Niall Buxton works for Pike.

(Buxton) “It’s basically doubled our fuel bill to produce a ton of asphalt. The higher end liquids which the state typically specifies are dramatically more expensive this year over the tail end of last year.”

(Zind) The result is that money earmarked for paving projects this year won’t go as far as anticipated. The Agency of Transportation now says it will have to postpone three of the 19 projects scheduled for this summer. Dawn Terrill is secretary of the agency.

(Terrill) “There have been spikes in oil prices in recent years that didn’t translate into substantial changes in paving estimates. But this year for the first time in many, many years, we are seeing that translation.”

(Zind) Terrill says paving costs are about twenty percent above what the state estimated they would be this year. Higher oil prices will also affect future paving projects. The proposed transportation budget for the next fiscal year calls for a twenty-two percent increase in state money for paving projects. That means the higher costs of paving will consume nearly all of added money.

Pike Industries is the sole bidder on seventy percent of this year’s paving projects. The company, which does business in five states, is often the lone bidder on Vermont projects.

Terrill says if they had more competition, it would lower the price of paving jobs which can run up to $600,000 a mile.

(Terrill) “On the few projects that we have where we have a really strong number of bidders, say five or six that come to a single bid – those tend to be our best priced projects.”

(Zind) Terrill says she’s meeting with potential bidders to find ways to create more competition in the bidding process.

Bill LaPorte is Construction Manager of Pike Industries. LaPorte says Pike is the only bidder on many jobs partly because other contractors are scared away by the state’s demanding specifications. He says the financial penalties levied for failing to meet those standards make paving for the state a high risk and expensive job.

(LaPorte) “Quality costs a little bit of money. We’re the best at what we do. If somebody else could do it, they would be doing it.”

(Zind) Because of the seasonal nature of Vermont’s road construction business, Pike’s payroll swells to over two hundred full time workers in the summer and shrinks to just two dozen in the off season. But LaPorte says the company has to provide benefits to its workers year round. And those costs are also increasing.

Much of the money for work on the state highways comes from the federal government. A long overdue transportation bill under review in Washington will increase the amount Vermont gets. But Terrill says it won’t be enough.

(Terrill) “Even with the new Federal transportation bill, there is universal acknowledgement that the funding levels are still not adequate for us to be able to even maintain the status quo. We’ve reached the point in the transportation network where substantial money is needed to stay ahead of the curve. And the dollars just aren’t there”

(Zind) The state is taking steps to slowly increase what it spends on transportation. Currently a percentage of revenue from transportation-related taxes goes to the general fund, instead of the transportation budget. The legislature plans to put a cap on how much money can be diverted that way. Terrill says that will help. But there are no short-term solutions to Vermont’s transportation funding problems.

(Terrill)”This is a challenge that we see into the future with no end in sight.”

(Zind) For Vermont Public Radio, I’m Steve Zind.

(Host) For more information on Vermont paving, go to Tomorrow Steve Zind examines how the state sets its paving priorities.

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