Diesel price spike expected to impact construction season
BURLINGTON, Vt. (WCAX) - Unleaded gas prices have reached an all-time high and the cost of diesel fuel isn’t far behind. Heavy equipment, plow trucks, buses, and truckers all rely on diesel, and as construction season approaches, experts say the steep prices will cause some serious bumps in the road.
According to AAA, the average diesel price across Vermont is now $4.94 cents a gallon. That’s just four cents less than the highest-ever average of $4.98 recorded at the height of the 2008 recession. Eighty percent of Vermont’s goods are transported into the state by freight haulers and trucking companies worry this situation could prove more painful for consumers than the recession.
“This feels different because it’s a very specific event and reaction to it by the western nations,” said Bill Smith with the Vermont Truck and Bus Association. He says this crisis could last longer than the one in 2008. After losing loads of money to spikes in diesel prices then, most trucking companies now incorporate a surcharge in their contracts with retailers. “If fuel costs go up, your price goes up.”
And when retailers pay more, the consumer swallows the cost at the cash register. But it could also force municipalities to push some important construction projects down the road. “It’s frustrating that it climbed so fast. You have to be responsive every day,” said Jason Sicard with JP Sicard, a Barton construction firm. With a fleet of 25 vehicles, Sicard is shelling out about a hundred more dollars per machine daily this week compared to last. “It’s a tough game right now.”
A game that companies must play with contracts. Sicard says his business primarily contracts with the state and municipalities for road, highway, and bridge work. “Most of our contracts have escalation contracts, but not all of them,” he said. They are currently charging clients $12 more an hour per job. For a 10-hour day, that’s an additional $120. But for locked-in contracts that don’t account for fuel price spikes, Sicard is feeling that pain at the pump. “We need to have some serious
conversations with the owners for some of those projects, especially the ones that are larger,” he said. Sicard says he needs to revisit those agreements and negotiate a higher price or else his company will end up swallowing it.
South Burlington officials say if municipalities must pay contractors like Sicard more for construction work, they will likely have to scale back big projects so as not to go over budget. That’s also because the price tag on petroleum-based asphalt will make any kind of paving far more expensive.
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