February prices for diesel fuel were up 57.5 percent over 2021, according to an analysis of government data by the Associated General Contractors of America. The February data was released prior to Russia’s invasion of Ukraine.
“Even though the February numbers represent some of the highest year-over-year price increases ever recorded, they have already been surpassed by even steeper price hikes since the war in Ukraine broke out,” said Ken Simonson, AGC chief economist, in a prepared statement. “Since the time these prices were collected, multiple increases have taken effect for metals, fuel, and trucking, while supply chains have become even more snarled.”
In its analysis of the Producer Price Index data, the Associated Builders and Contractors reported that construction input prices are up 24.4 percent from a year ago. Input prices for natural gas and unprocessed energy materials increased 65.1 percent and 32.3 percent, respectively. Crude petroleum prices increased 13.7 percent in February.
“It will get worse before it gets better,” said Anirban Basu, ABC chief economist in a statement. “Not only has Russia’s assault on democratic Ukraine created supply challenges in a number of categories, including oil and natural gas, but the reemergence of Covid-19 in parts of Asia and Europe is also poised to produce additional impacts. While many still expect commodity prices to decline later this year, the wait has been meaningfully extended by geopolitical conflicts and ongoing Covid-19 lockdowns.
“For contractors, this has the potential to put even more downward pressure on margins,” said Basu. “It is likely that, as bid prices continue to soar, more project owners will choose to delay project starts. The current state of affairs also creates complications for public agencies considering when to start large-scale infrastructure projects. It is a challenging time to begin such projects, given the workforce shortages that remain and materials price inflation. Undoubtedly, some public administrators will decide to extend planning time, delaying project start dates.”
In the AGC analysis, prices climbed at double-digit rates for nearly all categories of inputs in the cost index, Simonson said. The price index for diesel fuel leaped 57.5 percent over 12 months. The index for steel mill products climbed 74.4 percent. The index for aluminum mill shapes jumped 37.3 percent. The index for plastic construction products rose 35.6 percent over 12 months.
In addition, year-over-year increases exceeded 20 percent for the indexes covering copper and brass mill shapes, 24.4 percent; lumber and plywood, 22.5 percent; asphalt and tar roofing and siding products, 22.5 percent; gypsum products, 20.7 percent; and architectural coatings, 20.3 percent. Other inputs with double-digit increases for the past 12 months include truck transportation of freight, 19.1 percent; insulation materials, 17.8 percent; concrete products, 10.0 percent, and flat glass, 10.0 percent.
