California Asphalt Pavement Association
Vol. 15, Issue 52 || Dec. 26, 2022
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Greetings!
This weekly report contains news and information of interest to the asphalt pavement industry, customers and agency partners in California. Please feel free to distribute this newsletter to others who may be interested in asphalt pavements. To provide feedback or story ideas click HERE. Having difficulty viewing this newsletter? View as Webpage
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The year in review: Our picks for the Top 10 stories that impacted the asphalt pavement industry in California in 2022 |
Editor's Note: As 2022 draws to a close, we pause to highlight our choices for the Top 10 stories that impacted the asphalt industry in California over the past year. Click HERE to read last year's roundup. Look for our 2023 predictions in next week’s issue of this newsletter.
1. Transportation funding overall remains robust
The steady and robust flow of tax dollars to pay for critically needed road improvements continued to be the top news story in 2022, with many promising developments but also not without storm clouds on the horizon. The asphalt pavement industry entered the year feeling optimistic about the passage at the end of 2021 of the federal Infrastructure Investment & Jobs Act, a $1.2 trillion investment in a myriad of infrastructure needs, including roads and bridges. Initial projections were that California would receive a substantial share of the funding to the tune of hundreds of millions of dollars. However, the flow of dollars was slow to materialize in the form of pavement-related projects, leaving the industry asking a question throughout the year, “Where’s the work?” The main funding mechanism for fixing pavements, meanwhile, continued to be a political football throughout the year (see No. 3 below). Economic headwinds and increasing costs for energy (see No. 2 below) and materials, plus supply-chain disruptions, also cut into the number of projects available for bid, and some private owners pulled back on projects in the face of higher asphalt prices and fears of recession. All in all, it as was outlined in CalAPA’s Annual Asphalt Market Forecast that was published earlier this month, it was a mixed bag for the asphalt industry in California. Congress passing a appropriations bill to keep the federal government operating through the end of the fiscal year ended the year on a high note, however, allowing state DOTs to fully fund their transportation programs.
2. Global oil disruptions and price spikes
An event halfway around the world, the Russian invasion of Ukraine in February, set shockwaves through energy markets and a runup in global oil prices, which reverberated across the United States. Pump prices soared, most acutely in California, and the price of liquid asphalt, which generally tracks closely with crude oil prices, also rose sharply. This set off a series of geopolitical events, abroad and locally, as politicians sought to be perceived as responding effectively to the crisis (see No. 5 below). As contractors continued to be crushed under the burden of higher fuel prices, the industry and Caltrans worked on a fuel index formula similar to the one developed for asphalt that has been in place since the 1970s and has successfully served as a safety valve for global oil price shocks.
3. Climate plans and air-quality regulations
A myriad of new air quality regulations and the proliferation of climate action plans dominated the news in California in 2022 as the state continued on a determined path toward eliminating fossil fuels from the state’s energy future in the name of addressing climate change, despite a number of waring signs along the way. The California Air Resources Board pushed forward with proposed “zero emission vehicle” (ZEV) mandates, a climate action plan, and other air-quality regulations that impacted vehicles and equipment commonly used by the construction industry. As a global oil price shock brought renewed attention to the influence of regulations on the high cost of energy in California, a record heat wave over the summer nearly brought the state’s energy grid to the point of collapse. A CalAPA webinar series helped expose the disconnect between the state’s climate and energy strategies, which were outlined in the association's magazine HERE. Toward the end of the year CalAPA took the unprecedented step of joining three “amicus brief” federal court filings challenging CARB’s authority to implement such sweeping changes. As the year drew to a close, the Newsom administration doubled down, convening a special session of the Legislature to examine what it charged was oil industry profiteering. As pump prices trended back down, and an election came and went, the demonizing of the oil industry in California lost some of its steam, save for a flurry of press releases.
4. Stormwater regulations target construction activity
A years-long effort to update the state’s Construction General Permit for storm-water runoff culminated in the complex new rules being adopted by the State Water Quality Control Board on Sept. 8 over industry objections. While some industry concerns were addressed during the months of meetings and hearings leading up to the adoption of the permit, regulators in the end set aside industry concerns with regard to a provision to use Numeric Effluent Limits (NELs) over Numeric Action Levels (NALs) in the current permit as a key metric. In addition, the new permit’s use of total Suspended Solids (TSS) Surrogate was deemed by industry inadequate and filled with unknowns. There was mutual agreement, however, that the cost to contractors to comply with the new regulations will soar. This, construction industry advocates warned, could inhibit future development, which collides head-one with another state priority to address the state’s affordable housing crisis.
5. The gas tax becomes a political football
For more than a century Californians have paid a few cents per gallon at the pump to help pay for building and maintaining the roads and bridges they travel on. When those taxes were suspended in amber for more than two decades, diminishing the dollars available to invest in road maintenance, the state’s deteriorating roads and bridges suffered. In 2017, the Legislature finally took action, passing the $50 billion Road Repair & Accountability Act, which survived a repeal effort at the ballot box in 2018. By 2022, an election year, and with pump prices spiking due to a distant war in Europe, politicians began taking aim at fuel taxes as a way to show voters they were taking action to provide relief to constituents feeling the pain of higher inflation. The Newsom administration was first out of the gate with a proposed “pause” on the collection of fuel taxes as an inflation-relief measure as part of his proposed 2022-23 state budget unveiled in January. The governor’s budget called for a “pause” in the collection of state excise taxes devoted to transportation, prompting CalAPA to denounce the move in the news media as a “budget stunt” and “highway robbery.” The proposal ultimately was sidetracked in favor of other inflation-relief measures, including rebates to taxpayers. But the idea continued to float around Sacramento and Washington, D.C., and has been embraced by Republicans seeking to cut taxes in a visible way. In a related vein, Newsom and majority Democrats in Sacramento took aim at the oil industry for high prices, suggesting nefarious intent was behind escalating pump prices. As a political cudgel, the high gas prices issue appeared to wane slightly after the November midterm elections but still seemed positioned to be around for a while.
6. Asphalt utilization not matching funding projections
Year after year, the California Department of Transportation (Caltrans) is the largest single consumer of asphalt in the state. In response to persistent complaints by the CalAPA members that the volume of asphalt-related work in the state is not trending with overall transportation dollars expended, This runs counter, industry advocates argued, counter to the “fix it first” road-maintenance priorities outlined in SB1, the $50 billion Road Repair & Accountability Act of 2017, which is reaching the midway point in its implementation. CalAPA conducted an extensive study on the topic and notified Caltrans that its findings confirm the trend. By the end of 2022 the department said it would be presenting its own data to the association on the topic early next year and what steps the department would be taking to address the issue. In another closely-watched issue in 2022, Caltrans circulated various drafts of a proposed change to a “discount rate” that is factored in to the overall lifecycle cost of pavement projects. The proposed change, promoted by the concrete pavement industry, was opposed by CalAPA and the Asphalt Institute on behalf of the asphalt industry, citing numerous economic studies to back up its position. No final decision by Caltrans was announced on the issue by year’s end.
7. COVID-19 disruptions continue to wane
The COVID-19 pandemic that burst on the scene worldwide in early 2020 was widely felt in California, upending home and work life, supply chains and the economy. Early on, the asphalt pavement industry was designated an “essential” operation and continued to work albeit in an ever-changing environment of health and safety restrictions. In 2022, the virus was still moving around the state, but deaths and hospitalizations were greatly reduced in large part due to the widespread availability of vaccines, testing and treatment. Toward the end of 2022 there were ample signs that a return to something resembling normalcy were starting to take hold. The notable exception was periodic employee absences due to COVID, or a virulent flu strain that also was in circulation in 2022. Remote work arrangements also continued to remake the employer-employee relationship.
8. Democrats maintain firm grip in Sacramento, but key state races in Congress aid GOP
After surviving a recall election in 2021, Gov. Gavin Newsom glided to an easy re-election to a second term as governor in November, and Democrats maintained a firm grip on all statewide elected offices in the state and a “super-majority” in the Legislature. The only surprise in California electoral politics was the better-than-expected performance of Republicans running for Congress. Although a much hyped “red wave” in the 2022 Mid-term elections that would lead to Republican control of Congress never materialized, the GOP did eke out enough seats to take back the majority in the House of Representatives for 2023, thanks in part to Republicans winning a few key contested races in California. House Minority Leader Kevin McCarthy from Bakersfield was poised to assume the mantle as Speaker, taking over from another Californian, U.S. Rep. Nancy Pelosi from San Francisco, although a messy internal battle within the GOP made that anything but a certainty at year’s end. The fact that many GOP congressional candidates campaigned against the gas tax was not lost on the asphalt pavement industry, and that McCarthy had helped bankroll the gas-tax repeal measure, Prop. 6 in 2018.
9. Long-life asphalt pavement strategy gets national recognition
A prominent long-life asphalt pavement project on Interstate 5 near downtown Sacramento wrapped up work in 2022, and also captured a national “Perpetual Pavement” award by the Asphalt Pavement Alliance, a CalAPA partner. CalAPA profiled in the project in its magazine HERE and newly appointed Caltrans Director Tony Tavares was recognized by CalAPA for the achievement at the CalAPA Fall Asphalt Pavement Conference in Sacramento in October. Tavares had previously accepted a “Pavement Pioneer” award for the department in 2013, presented by the National Asphalt Pavement Association at a CalAPA pavement conference, in recognition of the department’s work in deploying the design strategy that seeks to construct pavements that last more than 40 years or longer with minimal maintenance.
10. Women of Asphalt a bright spot in addressing workforce challenge
The CalAPA annual climate survey found once again that workforce issues are among the top concerns of both public and private employers in 2022, with worries centered on retaining existing workers as well as recruiting new ones. A bright spot in this area was the formal creation in 2022 of a California branch of the national “Women of Asphalt” initiative, which seeks to empower and elevate women in the industry, and also those considering the industry for a career path. The local chapter held several events, supported by CalAPA, including events tied to association events. A Caltrans Transportation Laboratory Tour in Sacramento was very well received by attendees, and additional events are in the planning stages. More information about the California chapter can be found HERE.
Honorable Mention: NAPA unveils “The Road Forward” climate initiative; DeSilva Gates Construction is the first company in California to be awarded the CalAPA “Quality Paving Certificate,” the gold standard for excellence in asphalt paving; The asphalt industry continues to be disrupted by mergers and acquisitions in California, part of a larger trend of family-owned businesses being acquired by multi-state, national or even international companies.
Next week: Our predictions for the top news stories in 2023.
And finally: Noteworthy leaders the industry lost in 2022: Majid Mojibi, longtime president of San Joaquin Refining; Rene Vercruyssen Sr., retired leader of Baldwin Contracting (Knife River); and Norm Aguirre, formerly with Reed & Graham.
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CalAPA holiday office hours |
The CalAPA offices will be closed on Monday, Jan. 2, in observance of the New Year's Day holiday. The offices will reopen during normal business hours on Tuesday, Jan. 3. |
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Each week we highlight a word, acronym or other term commonly used in the asphalt pavement industry in California.
REHABILITATION: The renewal of an existing surface or pavement structure by repair, recycling, or overlay techniques.
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Paving Pointer of the Week |
Each week we highlight a key point or best practice of interest to asphalt paving crews, inspectors and others working in the field. We welcome suggestions. More tips can be found in our "Asphalt Parking Lot Construction Checklist" HERE. Information on the CalAPA "Quality Paving Certificate" program is HERE.
COMPACTION: Check pavement temperature before compaction begins. Don't rely solely on an infrared temperature gauge. Have a probe thermometer on hand to check the internal temperature of the mat. The ability to achieve proper compaction requires a mat temperature of 175 degrees or greater. Do not let roller operators park equipment on the fresh mat while compaction is ongoing.
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Each week we highlight a term that is specific to climate-change issues related to the asphalt pavement industry. This feature is intended to raise awareness of the asphalt industry's climate-change initiatives and the specialized terminology that goes with them. More information on "The Road Forward" asphalt industry climate initiative can be found HERE.
SLAG: Stony ore waste, a byproduct of smelting.
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"The truth is my light.”
– Latin Proverb
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CALAPA CALENDAR:
View all CalAPA events HERE.
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"Asphalt Forensics" class (in-person)
Tuesday, Jan. 10, 8 a.m. to noon
Doubletree by Hilton Pleasanton, 7050 Johnson Drive, Pleasanton.
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"Quality Asphalt Paving" class (in-person)
Tuesday, Jan. 10, 1 p.m. to 5 p.m.
Doubletree by Hilton Pleasanton, 7050 Johnson Drive, Pleasanton.
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"Asphalt Forensics" class (in-person)
Wednesday, Jan. 11, 8 a.m. to noon
Doubletree Ontario Airport, 222 N. Vineyard Ave., Ontario.
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Sign-up now!
CalAPA Annual Meeting & Awards Dinner
Thursday, Jan. 12, 5:30 p.m. to 9 p.m.
Hotel Intercontinential, 900 Wilshire Blvd. in Los Angeles
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SAVE THE DATE!
Topgolf Networking Event
Wednesday, March 22, 4 p.m. to 8 p.m.
Topgolf Sports & Entertaining Complex, 1050 N. Archibald Ave., Ontario.
Details soon!
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SAVE THE DATES!
2023 Spring Asphalt Pavement Conference & Equipment Expo.
Thursday & Friday, March 23-24
Doubletree Hotel Ontario Airport, 222 N. Vineyard Ave., Ontario, CA
Registration opens soon.
For exhibitor and sponsor information, contact Sophie You at (916) 791-5044.
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There's never been a better time to join the California Asphalt Pavement Association! Members receive insight and advanced notice on critical issues that impact every company's bottom line. CalAPA members also receive invitations to exclusive member-only events, in-depth "Member Alerts," our comprehensive asphalt market forecast for California, discounts and industry-specific networking opportunities not available anywhere else. CalAPA's new searchable on-line membership directory helps connect potential customers with member companies. Click HERE to download our Member Service brochure. Click HERE to view Vol. 1 of recent testimonials. Not convinced? Click HERE to view Vol. 2 of recent testimonials. With so much changing in the asphalt pavement industry, what you don't know can cost you! Click HERE to send us an e-mail inquiry, or contact Russell Snyder with CalAPA at (916) 791-5044. |
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We hope you enjoy CalAPA's Asphalt Insider newsletter. We are committed to providing you with the most up-to-date information on technical issues, regulation, news, analysis, events and trends in California that is of interest to the asphalt pavement industry and our various agency partners. Click HERE to contact us with any comments or suggestions.
Sincerely,
Russell W. Snyder, CAE
Executive Director
California Asphalt Pavement Association (CalAPA)®
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The "Asphalt Insider" is an official publication of the California Asphalt Pavement Association. For more information or to inquire about membership, call (916) 791-5044, or click HERE to contact us. Copyright © 2022 California Asphalt Pavement Association -- All Rights Reserved. The CalAPA name (No. 5,621,794) and logo (No. 5,621,795) are registered trademarks with the U.S. Patent & Trademark Office.
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P.O. Box 981300, West Sacramento, CA 95798
1550 Harbor Blvd., Suite 211, West Sacramento, CA 95691
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