A nationwide asphalt shortage is jeopardizing road projects across the state during the peak of the 2008 paving season.
"This caught us completely by surprise," said Jeff Kullman, a regional director for the Colorado Department of Transportation. "There are critical interstate projects we won't be able to deliver on."
CDOT says 34 projects could be affected by the shortage.
In the last two weeks, CDOT has learned from suppliers that there will not be enough asphalt to complete projects that have already gone out to bid.
Major interstate highways like I-70 use a high-quality asphalt with a polymer additive. There is currently a shortage of polymer due to the closure of two large suppliers in Europe and high demand in China and India.
In addition, refineries are putting heavy crude oil through a fifth refining process that produces less asphalt, which is petroleum based.
"There is a higher profit margin for fuels right now," Kullman said. "This will have an impact on our ability to complete projects."
Tom Peterson, executive director of the Colorado Asphalt Pavement Association, said the shortage will continue through the 2008 paving season but that supplies are expected to stabilize in 2009.
"There is a shortage," Peterson said. "As we work through this with agencies, it is still unclear which projects will be affected."
Price of crude a factor
About six weeks ago, SemMaterials, the nation's leading supplier of high-end asphalt, started noticing less asphalt arriving than what was ordered.
"Issues facing the economy like energy and food and everything is affecting us," said Larry Larson, vice president for sales. "The net result is less asphalt."
In the last five years, more and more refineries have added “cokers” to their plants. The cokers further break down asphalt and produce more oil for fuels.
"None of us really saw this coming," Larson said. "And now it’s just gone through the roof."
Larson said the supply will stabilize before next season, but that the industry is facing changes in years to come.
"We have had a major step change in the way the industry will operate," Larson said. "We will have to permanently pay more attention to the market, because now any kind of disruption in production will affect us."
CDOT says it will prioritize more heavily traveled routes and projects already under way. In addition to delaying some projects, CDOT may also extend the season, use asphalt that does not contain polymer, or partially lay asphalt until more can be added later.
In the mountains, work on I-70 at Empire Junction is scheduled to begin in August. Priority will be given to major highway projects, but because of the traffic density on I-70, it does require the higher-quality asphalt.
"It's certainly a nationwide issue," Larson said. But some areas, like mountainous regions, will be more affected. Larson estimates the company is 20 percent short of meeting nationwide demand.
"The status changes every week," Larson said. "It's agonizing and gut-wrenching to not be able to answer our customers’ very logical questions."
Some key projects that will be affected:
• Interstate 70 from Empire Junction/U.S. 40 and Fall River Road
• I-70, from Colorado 65 to Palisade
• I-25, from Santa Fe Drive to Sixth Avenue in Denver