Volatile bitumen price forces road cost hike

The cost of road construction has soared after the price of bitumen rose 45% in four months.

Bitumen accounts for around a quarter of the cost of new road construction and the volatility of its price has spread panic among contractors.

Paul Fleetham, director of Tarmac National Contracting, told CJ: "This has all happened very quickly. It went up 25% in one month alone.

"The rises add about 12%-15% to the cost of a road but the problem is it's so unpredictable. This makes it difficult to tender as you can't tell where it's going."

In the past 10 years prices have followed RPI (Retail Price Index), but Fleetham added: "In the past four month's everything's changed and the cost has shot up."

While it's not a traded commodity, the price of bitumen is now linked more closely with that of fuel oil, which is affected by wider market conditions.

As oil prices have gone up refineries have found it more economical to crack bitumen for further oil, meaning there is less of the material available.

Fleetham said: "The increased costs will put further pressure on local authorities' already stretched budgets and volatility makes it difficult for us to accurately forecast the cost of construction and maintenance."

Jim Christie, head of operations at Nyas Bitumen and chairman of the Refined Bitumen Association, said inflation in road costs was unavoidable and that local authority budgets were insufficient.

He said: "Central government should be recognising this and making suitable allowances."