High Oil Prices Fuel More Concrete Paving

High crude oil prices and refinery improvements could cause more owners to abandon asphalt for concrete pavement.

"Because of the relative pricing position of concrete to competing building materials-particularly asphalt which has recently posted 33% price increases-cement intensities are expected to grow by 2% in 2007," said Edward Sullivan, chief economist of the Portland Cement Association, during the recent World of Concrete show in Las Vegas.

In the past, concrete paving faced a capital cost disadvantage to less-expensive asphalt, even though asphalt requires more frequent maintenance. That's no longer the case, say World of Concrete attendees.

"The initial cost basis of concrete pavement is now on par with asphalt," said Michael Ayers, director of highway pavement technology for the American Concrete Pavement Association, Skokie, Ill. "We have seen where even when there is a cost differential, it has narrowed significantly to 5% or 10%, whereas in the past, the differential had been pretty substantial."

The nation's refineries view liquid asphalt as a waste by-product from the production of gasoline, diesel and kerosene. Yet the aggregate binder accounts for 40% to 60% of a paving project's total cost. With light-sweet crude oil prices still trading at $50-per-barrel or more, producing lighter-grade petroleum products is more profitable.

Refiners are also adding catalytic cracking units, which maximizes fuel production but leaves little crude leftover for liquid asphalt. With ultra-low-sulfur emission retrofits and coker installations planned for 2008-10, fewer refiners now even offer liquid asphalt. Concrete pavement, as a result, is no longer at a cost disadvantage.

"The last year has been good for concrete pavement," said Jim Hayward, western district sales manager for Gomaco, an Ida Grove, Iowa-based concrete paving machine manufacturer. "But it's still tough to get some DOT's out of the asphalt mindset."

Diesel Fuel Prices Drop

Diesel fuel prices, the second largest construction expense after labor, have fallen to a 53-week-low of $2.43-per-gallon, said Tavio Headley, an economist with the American Trucking Association, during the World of Concrete show.

Prices have dipped 19 cents in the last past six weeks alone as a result of an inventory glut caused by a mild winter. Refiners produced more diesel fuel since heating oil supplies were already high.

ATA, meanwhile, is seeking to create a single diesel fuel standard to help eliminate shortages and stabilize pricing. Boutique fuels used in certain parts of the country only exacerbates local shortages. ATA is additionally seeking a greater investment in refining capacities.

DePaul Announces $3M Gift, Drive to Raise $16M

Chicago's DePaul University has announced a $3 million gift from an anonymous donor to its Real Estate Center and launched the center's $16 million fundraising campaign.

With the gift, the Real Estate Center has surpassed the halfway mark toward its fundraising goal by attracting $10.5 million in donations during the quiet phase of its campaign.

Douglas Crocker II, retired CEO of Chicago-based Equity Residential Properties Trust, and his wife, Cynthia, donated $2 million to fund the directorship of the Real Estate Center in August 2005, and DePaul alumnus George Ruff, founder and senior principal of New York-based Trinity Hotel Investors LLC, gave $1.5 million for a real estate professorship in September. Another $4 million came to the center through an endowment underwritten by the Michael J. Horne Education & Healthcare Assistance Foundation in October.

The fundraising success allowed DePaul to hire James Shilling, DePaul's Michael J. Horne Chair in Real Estate Studies and expert in real estate economics, finance and investment. Shilling joined the faculty to lead the center's research program, teach in the university's MBA program and foster educational and research links to Chicago's real estate community.

Schedule Announced for St. Louis' I-64 Project

The 2007 schedule for the $420 million Interstate 64 project in St. Louis was announced: