Plunging prices for crude oil have lowered costs for many Americans, particularly at the gas pump. But lower oil prices may also affect the U.S. construction industry in both positive and negative ways.
How Oil Prices Impact the U.S. Construction Industry
- Fuel prices – Lower oil and gas prices have reduced transportation costs for construction companies, making it cheaper and easier to move supplies and other necessary materials to construction sites and transport dirt, stone and waste. This is expected to have a short-term impact on project costs and profitability, but they can’t be counted on to impose any long-term reductions in overall construction costs.
- Equipment purchases – Equipment purchases can be affected by fuel and oil costs. Making investments in new equipment requires, among other things, the ability to estimate fuel costs and the potential value of equipment in the future. An unstable oil market makes these projections difficult for even seasoned industry experts.
- Alternative fuels – General consumers and construction companies are used to using gasoline and diesel fuel despite their costs or disadvantages. When fuel costs are extremely high, more attention is paid to the potential of alternative fuel sources that are more plentiful or less expensive. Low crude oil, gasoline and diesel prices relieve that price pressure and allow fuel consumers to lose focus on the urgency they once felt to promote alternative fuel sources. When construction companies can get plenty of cheap gasoline and diesel fuel, they’re less likely to support the inconveniences and changes required to use alternative fuels.
- Future expectations – Though it may seem cynical to some, construction professionals at almost all levels expect oil prices to rise significantly again, perhaps even higher than before. When this happens, all of the concerns about high oil and fuel prices will once again occupy industry experts’ minds, but little will have been done during the comparatively easy times of lower to permanently resolve the issues.
Construction Monitor provides the most accurate and up-to-date information on trends in the construction industry throughout the United States. Contact us today for more information on the expected effects of oil prices on the U.S. construction industry.
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