Asphalt Rationing and Industry Disruption

We hope you are having a great summer with your families. We would like to update you with respect to important events happening in the asphalt industry. Over the last few weeks, a critical shortage has developed in the asphalt supply chain, specifically with respect to the oil utilized to manufacture asphalt.

Most asphalt plants in the broader Denver area are supplied by the single oil supplier Suncor, with its massive plant operating in Commerce City. As we understand it, Suncor’s asphalt oil production capability has been down due to unexpected technical difficulties related to normal maintenance. As a result, we’ve seen the major asphalt plants move into rationing mode with external asphalt customers due to lack of asphalt oil.

How does this affect DACS? Asphalt availability will be limited for at least the next few weeks industry-wide, and only able to be confirmed by the plants as late as the day before jobs are scheduled. We are working with the plants daily to receive confirmations for our jobs in the following days and weeks. DACS benefits from the best industry position to receive asphalt, if it is available. Bottom line, please be patient with the process, and know we are working as hard as we can to get your jobs finished as quickly and efficiently as possible.

Where industry suppliers are supplying asphalt, they are increasing prices effective immediately by $10 per ton. Further, there is not enough asphalt to even serve their internal crews, as can be seen by the I-70 construction delays being reported publicly now (link: https://lnkd.in/eaXp-zY).

We will endure significant inconveniences and increased costs while the shortage is in effect. For example, we will be forced to pull asphalt from plants often located much farther away from jobsites than normal. Trucking costs – one of the largest costs in asphalt projects – will be in excess of prior estimates as a result of this reality. Further, crews may be faced with lower job efficiency while waiting on asphalt to arrive from these farther distances as a result of plant congestion and traffic. 

We will be monitoring the above daily to assess the impact on our business and the impact on job costs versus job proposals created prior to the industry shortage. 

We look forward to demonstrating to you why DACS deserves your business for the long term as we continue to serve you during this industry crisis!

With deepest gratitude,
Jason