Bituminous paving has been sheltered from the full impact of higher oil prices because the heavier crude they come from is still under pressure. As electric utilities switch to natural gas to meet clean air regulations, there has been a drop in demand for residual oil, he says. As a result, asphalt prices have not seen the same upward pressure as other petroleum-based products. Transportation costs have not been as lucky. Insurance and health care are other potential fronts for inflation to make a new move.
Labor costs remain construction's most important firewall against inflation.
In this cost report, there are some hints of a crack in the wall. Wages tracked by ENR have also started to pick up momentum. If higher energy costs prevail and labor shortages start to impact wage settlements, inflation could open a broader front.