Could inflation lead to fewer miles of road fixed?

Posted at 7:29 PM, Apr 11, 2022
and last updated 2022-04-11 19:29:38-04

COMMERCE TOWNSHIP, Mich. (WXYZ) — You have noticed it at the gas pump and the grocery store. Now the Michigan Department of Transportation is noticing it as it bids out jobs. We are talking about inflation.

It is a trend that has the potential to impact just how many miles of road can be fixed in the future.

“I think we are seeing this across the country. It is not just a Michigan issue,” said Paul Ajegba the State Transportation Director.

He says the Michigan Department of Transportation plans for about 4% inflation as it budgets years out. Some bids for future projects are coming in above the estimated prices.

“Right now we are about 2- 3 percent overestimate,” said Ajegba.

The American Road And Transportation Builders Association compiled information on how the prices of what is used to fix our roads changed. Diesel fuel, asphalt prices, concrete, steel-concrete block, and brick prices have all increased.

The American Road And Transportation Builders Association says when you look at the weighted prices for different components used to build highway and bridge projects the costs have increased 21% in the last year.

7 Action News Recently interviewed R and R Asphalt General Manager Dylan Taulbee. He says the costs impact local businesses that have contracts for work locked in.

“We are very committed to our customer base and making sure we do what we say we are going to do for them,” he said. “We are just going to do our best and try to make it up on the back end over time.”

The Federal Reserve is increasing interest rates, aiming to control inflation. As a result, MDOT is not yet making changes to long-term plans.

“By the end of this year, we are going to sit down and recalibrate our program to see what the numbers look like,” said Ajegba.